Dick Smith Electronics - the nerve

[MortonH]

Originally Posted by bugeater

I think Channel 9 is one of the better examples. It didn't technically end up insolvent, but only because of a negotiated agreement just before it was about to.

But in reality, what do you suggest as an alternative? People make mistakes, companies get into trouble and with restructuring they can still be viable ongoing businesses. Just because some investors (debt or equity) lost some money is neither here nor there. They are transactions between consenting adults and everyone should know the rules or not get involved. Now if fraud is involved, that's a different matter, but that isn't usually the case.

I agree. If you're going to invest in something then it's up to you to do your homework and accept the risk.

But the customers that got shafted on the gift vouchers were not investors. If the company had gone totally belly up and was no longer trading then fair enough - bad luck - but they ARE trading and they have stock that they could exchange for the vouchers. The receivers are screwing those customers unfairly, but apparently within the law. That's what really stinks.

[multiweb (Marc)]

Originally Posted by MortonH

But the customers that got shafted on the gift vouchers were not investors. If the company had gone totally belly up and was no longer trading then fair enough - bad luck - but they ARE trading and they have stock that they could exchange for the vouchers. The receivers are screwing those customers unfairly, but apparently within the law. That's what really stinks.

If you do have a receipt / proof of purchase for the gift card for let's say $100 and go back to the shop where you bought it from then could you get a refund? If the person says no then say I'll have this item then. If they still say no you can't then raise your voice, play stupid and ask why until heads turn in the shop. Could get interesting.

I did that once in a St George Bank Branch after a CC fraud that wasn't getting resolved for months. Walked rudely in front of the line in peak hour and started talking loudly. It went a bit pear shape with the teller who called the manager. Within 10min some bulky guys came around. The word police was mentioned. I said great call them. Let's all have a talk about it. I was escorted in the manager's office and miraculously the money was recredited on the spot by him from a terminal on the table right here and there.

Bad publicity usually works. Just got to pick the time and place. In any case the loudest mouth gets the money back, remember that.

[bugeater (Marty)]

Originally Posted by MortonH

But the customers that got shafted on the gift vouchers were not investors. If the company had gone totally belly up and was no longer trading then fair enough - bad luck - but they ARE trading and they have stock that they could exchange for the vouchers. The receivers are screwing those customers unfairly, but apparently within the law. That's what really stinks.

At the end of the day gift card holders are unsecured creditors. You've essentially lent money to the company. Ignorance is not an excuse and all that. While I realise most people have no reason to understand what this means, making laws because people don't know stuff is what a nanny state does.

Frankly I think gift vouchers are kind of stupid for this exact reason - why not just give cash. I keep buying them as gifts though for some reason Maybe next year I'll get my son to draw some fake vouchers and sticky tape the cash to those.

[PCH (Paul)]

When you think about it, the whole concept of exchanging cold hard cash that never expires and has no limitations what you spend it on, for a voucher that might at worst be totally worthless (as in this case) but at best can only ever be spent on the limited range of goods that the store sells, and which expires in a year usually in any case.

How mad is that for a swap when you think about it!!!?

[MortonH]

Originally Posted by PCH

When you think about it, the whole concept of exchanging cold hard cash that never expires and has no limitations what you spend it on, for a voucher that might at worst be totally worthless (as in this case) but at best can only ever be spent on the limited range of goods that the store sells, and which expires in a year usually in any case.

How mad is that for a swap when you think about it!!!?

True. I'll never buy a gift voucher again.

[AndrewJ]

How mad is that for a swap when you think about it!!!?

Its all down to good advertising ( and very fine print ).
Almost close to obtaining a financial advantage by deception.

Andrew

[MortonH]

They should call them Unsecured Creditor Loan Vouchers. See how many they sell.

[Bassnut (Fred)]

Such naivety.

Much retail investment is via super funds.

If your super fund:

Invested in the DSE IPO, switch, now.
Invests in Woolworths, ordinary effort.
Invests in Anchorage, excellent, very well done!. Smart.

Off course liquidators get paid 1st, or no one would do that job, nothing here is their fault.

Yes, the gift card thing is wrong.

[gts055 (Mark)]

"Off course liquidators get paid 1st, or no one would do that job, nothing here is their fault."


Hmmm, the liqidators assess these situations, and only get involved if there are sufficient funds left to guarantee their payment. Goldiggers they are, paying their staff according to rank in hundreds of dollars per hour. I liken it to legal theft. Unsecured creditors such as suppliers of goods or services may get nothing.

Mark

[The_bluester (Paul)]

Originally Posted by bugeater

I think Channel 9 is one of the better examples. It didn't technically end up insolvent, but only because of a negotiated agreement just before it was about to.

But in reality, what do you suggest as an alternative? People make mistakes, companies get into trouble and with restructuring they can still be viable ongoing businesses. Just because some investors (debt or equity) lost some money is neither here nor there. They are transactions between consenting adults and everyone should know the rules or not get involved. Now if fraud is involved, that's a different matter, but that isn't usually the case.

I think the real bones of it here is it is very plain that there was no intent by Anchorage to restructure DSE and resurrect the business.

The actions taken over recent times quite plainly show an intent to take advantage of the situation of DSE when Woolies sold it to tweak the books within a hair of cooking them but not quite, in order to then use the businesses own assets to buy it with, and make the short term prospects look far better than they actually were in order to make it into a honeypot for investors and unload it at a huge profit. Unlawful? Probably not, unconscionable? Obviously not for Anchorage.

Somewhat harder to pass judgement on the current management except as indicated by the Forager write up to accuse them of not being very smart, presumably they intended to try to make a go of the business, but had they decided to wind it up just after Christmas or were they hoping for a bumper result to save the business? The latter would be able to be seen as gambling with customers money, the other a pretty cynical cash grab with the gift cards.

[AussieTrooper (Ben)]

Originally Posted by Wavytone

Unfortunately you are wrong. The bankruptcy law is quite clear - holders of these cards are unsecured creditors.

This.

As general advice, do not ever buy a gift card. They are not as good as cash, even in the store they are valid for.
Most have expiry dates, and when a situation like DS shows up, they end up with nothing at all.

[AussieTrooper (Ben)]

Originally Posted by AndrewJ

Amazing how unions get bashed for doing dodgy deals worth a few thousand dollars, but white collar criminals ( bank "advisors", east west tunnel "advisors", hedge fund scum like those linked to DSE etc ) dont get questioned when 100s of thousands just go missing.
Wonder whose side the govt ( of either persuasion ) is on????

Andrew

Well said. In all my life I had never attended a picket line until the east west link showed up. The whole process was disgusting, yet after destroying many lives during the process, every single person associated with it walked away with a fat paycheck. Meanwhile, most residents never got their homes back.
The unions certainly have their problems, but what went on with the east west link just blows them away in sheet magnitude.

[AussieTrooper (Ben)]

Does anyone remember who the electrical retailer was a couple of years ago that went broke?
The TV footage of a family going into the store and taking a fridge that they had already fully paid for, then having the police show up and force them to return it to the store was just horrible to watch.
No gift vouchers here, they had already handed over their hard earned, only to find out that some creditor now owned their fridge for the sole reason that it hadn't been delivered yet.

[AndrewJ]

Whilst not linked to gift vouchers, its certainly salient to the thread
Ie i wonder how the current "Big Clive" debacle will get handled.
Already they are saying that the taxpayer may have to bail out the workers as there is no money left in the company to pay out their entitlements.
Life goes on as usual for the owners????????

Andrew

[billdan (Bill)]

Liquidators can sure be ruthless, I remember back in 2001 when a computer company in Brisbane went bust. They had about 2 dozens PC's on their in-bench waiting warranty repair.

All of them got confiscated by the liquidator, it was horrible to watch as students and family people were coming in asking about their computers only to be told they are now an unsecured creditor and must file a claim to get compensation.

Before they went bust the company should have warned people about leaving their goods there, it would have been helpful.

Bill

[The_bluester (Paul)]

Originally Posted by AussieTrooper

Does anyone remember who the electrical retailer was a couple of years ago that went broke?
The TV footage of a family going into the store and taking a fridge that they had already fully paid for, then having the police show up and force them to return it to the store was just horrible to watch.
No gift vouchers here, they had already handed over their hard earned, only to find out that some creditor now owned their fridge for the sole reason that it hadn't been delivered yet.

Might have been Retravision.

The business world is littered with stuff like this. We live on a rural property, no town water, drainage or sewer, all up to us. Some years ago the original septic system was failing through poor original design and age so we had to replace it. The hot ticket at the time were low energy input "wet soil composting" systems, basically worm based filtration units discharging under pressure into underground irrigation. I wish our septic had held on just a little longer. About a year after install our first warning sign came with an unexpected failure of the unit. About a year after that, on the back of about a single quarter of low sales due to flooding in Queensland (And IMO, rising warranty costs) the manufacturer went belly up and that was the end of any support for the system. They demanded a large deposit (over 50% from memory) on the system with the balance payable on delivery. The deposits were funding the operating expenses of the business and a couple of months slow sales and it was history.

Turns out that they put in a big order for parts just before entering administration, ended up with suppliers out of pocket to hundreds of thousands of dollars, ditto for installing plumbers (The manufacturer charged the customer and paid the installer) A yearly service was required and the arrangement at the time was a service contract with the manufacturer, they send an invoice for the annual service, you pay, then they send out the plumber to do the work. We got our service invoice the day before the letter telling us they were in administration and if we had paid, "tough luck you unsecured creditor" People who had paid deposits of $7500 and more were left with nothing, some people were out of pocket the full whack and ended up with nothing but a big hole in the ground when the system was snatched off the back of delivery trucks after despatch.

Turns out the design of the system is closely related to it's content (Think about it) and it is sooner or later going to go completely belly up and cost us anything up to $15,000 to sort out (The big ticket end being the "Backhoe repair", as in, replace it with something that works properly)

Then it turns out that the "Inventor" also invented another failed waste treatment system that cost its buyers tens of thousands to install, try to keep working then rip out and replace. That company went broke too when the warranty claims for a system that never worked properly started to mount up.

Long story short, the DSE thing is no great surprise, the only real difference here is the middle man who bought it cheap, puffed it up and sold it on purely in the interest of turning a dollar.

[doppler (Rick)]

I had a friend in Adelaide who had his (bought and paid for) motor cycle in a dealership for a service when the shop went into liquidation. They wouldn't give him his bike back so he hung around the shop for a week and one day when the roller door was up he ran in and grabbed his bike and rode off. They were going to get the cops but apparently once the bike was off the premises they had no legal standing.

[AussieTrooper (Ben)]

Originally Posted by doppler

I had a friend in Adelaide who had his (bought and paid for) motor cycle in a dealership for a service when the shop went into liquidation. They wouldn't give him his bike back so he hung around the shop for a week and one day when the roller door was up he ran in and grabbed his bike and rode off. They were going to get the cops but apparently once the bike was off the premises they had no legal standing.

It's totally wrong that a bike in for service could ever be considered their property (morally, perhaps not legally). Very different scenario to a gift voucher or goods being sold by the store at the time it goes broke.

[doppler (Rick)]

Originally Posted by AussieTrooper

It's totally wrong that a bike in for service could ever be considered their property (morally, perhaps not legally). Very different scenario to a gift voucher or goods being sold by the store at the time it goes broke.

I think it was something to do with receivers owning the oil, filters and parts replaced during the service.

As for the gift voucher scam, you would think that there would be a criminal aspect to this if Dick Smith's were selling the gift vouchers after they had already begun planning for the "voluntary" receivership.

[Chee]

But on you main topic; yeah, you wouldn't trust them with a new lay-by, would you? The private Equity firm made an absolute killing on this and gave us all a lesson, if we needed it, on just how much a brand, employees, and customers mean, to those businesses that produce nothing of worth except profit. Disgusting.


Yep, including all the fund managements and supers, that piled into it when it was delisted.
Big losers are the mums and dads with super funds and those who bought into the story of a revitalized business.
It is just incredible, that it could relist at $2.00 plus considering Woolies could not make a cent after buying the business.
You have to ask, how the fund managements could believe that it is a viable, profitable business?