Shocked furniture suppliers bear the brunt of Eon receivership
A moneylender whose shareholders include Fay Richwhite will get its money back from the receivership of high-end Auckland homeware store Eon, but furnishing suppliers are not so lucky.
Staples Rodway was called in as receiver at 4pm on Tuesday, a year after Eon moved its Auckland store to the Britomart precinct.
NBR understands that moneylender Blackbird Finance is owed a sum of money but should be repaid from proceeds of a closing down sale now on at Eon.
Trade in the store seemed to be brisk as news of the receivership spread creating a surge of bargain hunters. Prices were being discounted but typically only by about a third of the ticket price.
Staples Rodway director Kevin Pitfield says the receivers are happy with the results in terms of realising assets to pay Blackbird, whose shareholders include Fay Richwhite.
But most of Eon’s suppliers may not be so pleased. Most are unsecured creditors of the firm. Eon stocks mainly designer homeware, jewellery, ceramics and custom-made furniture by New Zealand designers.
There were angry scenes at the shop yesterday as counter staff were confronted by furnishing suppliers.
Some of the suppliers were demanding the right to remove furniture and goods that they had not been paid for.
“It’s been just dreadful. We’ve had to take the brunt of it and it’s not our fault – we’ve all just lost our own jobs. I’ve been crying all night and so have some of the other staff. It’s been a big shock for everyone,” one senior assistant said.
Burly security guards were posted at the main entrance to ensure suppliers were unable to remove their goods. One supplier warned to leave yesterday afternoon stood outside the store in a daze wondering why the law prevented him and others from re-claiming goods they had supplied and not been paid for.
Another supplier says he is already owed $6000 for furniture supplied before his last assignment was delivered to the store only days ago.
Mr Pitfield says suppliers should have registered an online claim against their goods on the Personal Property Securities Register for a cost of $3.
“It never ever ceases to amaze me why suppliers don’t avail themselves of the opportunity,” Mr Pitfield says.
Once the receivership is complete, control will be handed back to Eon’s director Angela Roper and claims from unsecured creditors can be addressed at that time.
Ms Roper also owns a Wellington Eon branch.
Eon is just one of a spate of receiverships Staples Rodway is dealing with at the moment. The firm is averaging five new assignments a week, up from around one a fortnight earlier this year, Mr Pitfield says.
Retailers in particular are feeling the brunt of lower spending – but they shouldn’t pin false hope on Christmas drawing near.
“The retailers out there that are hanging their hopes on pre-Christmas sales, and that’s the only thing keeping them going in terms of solvency – they’ve got potential to come unstuck before Christmas,” Mr Pitfield says.
These companies should look to start restructuring now, he recommends.
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Comments and questions18
It seems unfair that the PPS Act removed the right of the Romalpa clause from suppliers who have not registered with the PPSR. Makes total sense that if a supplier has not been paid then they should have the first claim over their goods - after all the finance company money has obviously not been used to pay for the goods.
So the closing down sale will use proceeds of the sale of goods that have not been paid for to pay back secured creditors?
What was actually wrong with the Romalpa clause, or did it just get in the way of secured creditors, usually banks and finance companies??
I have been in business for some time and never has anyone -- not my solicitor, my accountant, my official business mentor, nor any other advisor or peer -- told me about registering under PPSA. Pitfield's expressed amazement is disingenuous -- such vultures make money out of others' misfortune using this law. This is a carefully designed and concealed law that ensures the big boys always get their pound of flesh, and the small guys end up loosing. We are seeing the same thing all over Wall St and London and it is the rotten heart of capitalism where financial laws are made by the super rich to protect the super rich. I challenge Blackbird and Fay Richwhite to promote a Kiwi sense of community and to share their pickings with those of us who are suffering in this collapse far more than they possibly could. They only have money to play with because we are earning it at the coal face.
Registering goods under PPSA invoiced to Eon that are manufactured for their client orders and sent out directly from the manufacturer to their client is a complete wast of time and money. Their client pays them a 50% deposit and the balance on or before delivery, muggins manufacturer then waits for his money, or not as the case maybe. Their client has paid for and received the product, once a company has gone into receivership the manufacturer will never get payment and will never see the product again. That is the reality. The receiver in the mean time rakes it in, he is the only winner, ask Pitfield what his hourly rate is, perhaps it should be a percentage of what he collects,then the creditors may get to see some cents in the dollar at the end of it all.
I do agree with all comments posted in regard to the PPSA. All this said it does leave the design industry with a sour taste, I can only hope that the designers affected by the lack of action from EON and facing financial upheaval can find a way forward. Perhaps a collaborative approach from the designers will move them forward.
we are a small company and use the ppsa. If you dont you should get off your bum and get info from the MEA / Employers etc.
Interestingly, no one comments on the poor management and lack of transparency that has left dozens of New Zealand small design businesses in debt and with no answers for months. We as a company were requested to send more stock only days prior to the receivership after having remained unpaid for nearly 6 months. Of course we declined, but were still never told of the hundreds of thousands of dollars of debt that would eventually engulf a chunk of our well managed assets...
And as for the PPSR- it would have made little difference to the smaller companies like ours as the larger debt of the finance company holds priority and will probably not be recovered.
The managers were heartless to keep us in the dark.
What a complete mess - what an injustice - what a selfishness - how tragic - someone write a song please! the queen of new zealand design could not let go of her hope to maintain her fake status, and her selfish pride kept her from saving the people that supplied the product she built her empire on. she must have known this (the liquidation) is going to happen and could have given the suppliers a call to help themselves before the receivers do. there is no moral in any of this. i am disgusted but it does not come to a surprise to me - most business people have blood on their fingers and it is never their own.
It is a sad day when another company goes belly up.
once again the designer/manufacturer get done,always the way.
We maunfacture a range of products and have noticed in the last few years that the lack of support for nz made products is getting less and less ,people just think about buying over the internet ,not thinking about the benifits of supporting local.
these are hard times for nz manufacturers & designers.
We get more support from the australians!
This is the third company to go under in the past year where I have gift vouchers and have not got around to spending them prior to the collapse... If I get any gift vouchers for Christmas this year I'll be spending them on the 26th!
...DISGRACE
god, what a shambles. i am so sympathetic towards all of eon's out of pocket suppliers, so many of whom are young and enterprising individuals who have risked everything to pursue a creative dream.
Fire your Lawyers, Accountants and "Official' Business mentor who have not advised you to register securities to ensure you won't lose them if/when your customores go broke. These people are failing their professional duty to you.
in fact you should strongly consider suing these buffoons. They have no excuse.
Angela,I would like you to pay me the money you kept from the sale of my commission jewellery. After trying unsuccessfully for months to be paid I smelt a rat and retrieved my stock a week before the fall. I guess I was one of the lucky ones but I have been left with a bitter aftertaste from the arrogance and disdain, not a word, a letter of apology maybe, to all those designers and manufacturers who sustained you for so many years.
These suppliers of office furniture are being forced into a situation that isn’t their fault. I really hate that this kind of companies are trying to force money out of others with silly policies that don’t cause any damage to anyone.
The home office furnitureindustry in the UK has definately been put under more pressure since the launch of several large corporations who have taken a huge market share making the smaller businesses lower their prices and margins.
in this business you need to know what is the request, to make offer. it is a death end. the furniture industry will loose enough. i know for my own experience how pretentious can be a client for a Cabinet Refacing. a lot of furniture waist.
Its shocking the way Eon going into receivership have put so many office furniture company's futures at risk i feel sorry for the likes of http://www.officestationery.co.uk/
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