Secret stash of Kleenmaid stock

…he had $220,000 in floor stock when he shut his shop, and said Kleenmaid officials declined to buy it back to fill outstanding orders: "I've lost my life savings. I've got a young family and a wife and for the first time in my life I've had to borrow money from my parents to pay my grocery bills. I'm facing bankruptcy."

http://www.news.com.au
April 19, 2009

Secret stash of Kleenmaid stock
Mitch Gaynor

MILLIONS of dollars worth of Kleenmaid stock remains in storage around the country, even though $27 million worth of appliance orders were left outstanding when the company collapsed just over a week ago.

The extent and wholesale value of the stored inventory is likely to be revealed at a meeting of Kleenmaid creditors on Thursday, which is expected to attract hundreds of angry customers.

Some pre-paid up to $40,000 on a range of Kleenmaid kitchen appliances that were never delivered.

But those left empty-handed are expected to be told that the stored appliances have been claimed by a crediter higher up the refund chain.

A spokesperson for Deloitte, which was last weekend appointed administrator after Kleenmaid collapsed with more than $67 million in debt, said it was believed at least $2 million in appliances were in storage.

They are being held by global shipping company Schenker at several warehouses around the country, including one in Qantas Drive, next to Brisbane Airport.

But Schenker is expected to be revealed at this week's meeting as one of Kleenmaid's major single creditors.

"The warehouse-provider is owed in excess of $2 million and has claimed a lien over all stock," administrator John Greig told The Sunday Mail. This means that Schenker is not expected to release any stock until acceptable arrangements have been reached with them in relation to their outstanding debt, Mr Greig said.

A spokesperson for Schenker could not be contacted for comment.

It has emerged that most Kleenmaid customers who pre-paid for goods or paid deposits routinely signed off on the company's terms and conditions, which included a clause they could not claim ownership to any ordered product until it was fully paid for and delivered.

As such, they will be ranked as "unsecured" creditors of the failed company and unlikely to see any return until after secured creditors such as banks and suppliers attempt to recoup their losses.

It is expected to be revealed at this week's meeting at Chifley on Lennons hotel in the Brisbane CBD that Kleenmaid directors Andrew and Bradley Young took desperate measures in recent months to stem compounding losses, incurred when suppliers ditched the company over unpaid bills and customer sales slumped in the economic downturn.

Kleenmaid advertised "48-hour sales blitzes", appliance auctions, holiday sweeteners and stocktake sales in an attempt to pump funds into a business haemorrhaging cash.

Some customers have claimed they were pressured into paying additional deposits and to settle accounts, even though it has emerged there were no immediate plans in place by Kleenmaid to deliver promised appliances.

Andrew Young said he was considering attending the creditors meeting.

"I would have thought so, but I'm not sure where I will be," he said.

He has hinted at putting forward a deed of company arrangement which would allow Kleenmaid to continue trading with his involvement.

Mr Greig said no proposal along those lines had yet been received. He declined to comment on the chance of such an arrangement being accepted, but independent observers said it would be a highly unlikely course for the administrators to take, given the size of the company's debt.

Representatives from the Australian Securities and Investments Commission - the government corporate watchdog - also are expected to attend the meeting.

An ASIC spokesperson said the commission was undertaking "inquiries" into Kleenmaid, but no formal investigation had been launched.

The fall-out from the collapse is still being felt at the shopfront level.

Former Jindalee franchisee Josh Macartney said he had been forced to walk away from his business when Kleenmaid could not provide product to fill his orders.

He claims he had $220,000 in floor stock when he shut his shop, and said Kleenmaid officials declined to buy it back to fill outstanding orders: "I've lost my life savings. I've got a young family and a wife and for the first time in my life I've had to borrow money from my parents to pay my grocery bills. I'm facing bankruptcy."

http://www.news.com.au/couriermail/story/0,20797,25352597-3122,00.html?from=public_rss


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