ASIC could pursue failed reseller Warehouse1 for insolvent trading

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ASIC could pursue failed reseller Warehouse1 for insolvent trading

The liquidator for failed online reseller Warehouse1 has told creditors that he could pursue an insolvency claim against the company's director.

Warehouse1 sank into liquidation four months ago, appointing SV Partners to lead the liquidation, along with another related company called Solutions Warehouse which has the same director.

The liquidator pointed to ongoing problems with Warehouse1's internal software platform as a likely cause of its insolvency, which hindered its website speed and marketing. Payment intermediaries also caused refunds to occur without the reseller's consent.

Warehouse1 director Sam Corrie, also known as Sam Robinson, also blamed an unexpected drop in sales, heightened competition and preferential pricing given to competitors as reasons for the company's collapse.

Last month, SV Partners said a number of factors suggested the company traded while insolvent as early as July 2017, including balance sheets that recorded net asset deficiencies and negative working capital and liquidity ratios.

The company started incurring trading losses in early 2017, and 52 percent of its payables were outstanding by more than 60 days by October.

SV Partners' Michael Carrafa told creditors at a meeting last month that ASIC could also look to disqualify Corrie from managing a corporation for up to five years as a result of being a director of two failed companies within the past seven years, referring to both Warehouse1 and Solutions Warehouse.

Carrafa added that he had requested Corrie to complete a financial position of his assets and liabilities but was yet to receive it.

Warehouse1 had incurred more than $4 million in debts when it was placed in liquidation, including $1.7 million owed to Ingram Micro, $475,000 to Dicker Data, $235,000 to Alloys and a secured debt to the Commonwealth Bank of Australia for $468,000.

Refund claims amounted to $713,000 from 821 customers, though SV Partners told CRN in March that customers who ordered products from Warehouse1 wouldn't receive a refund for purchases they hadn't received, and would instead have to request a refund from their credit card company.

Carrafa told creditors that his investigations into Warehouse1's affairs were still ongoing, partly as a result of the large volume of transactions that were processed through the company's bank accounts.

In March, the liquidator still hadn’t indicated the likelihood of a return to creditors. However, at the most recent creditors meeting, he specifically told CBA that they would not be paid out in full. He did say though that he had remitted $20,000 to CBA for the net realisations of Warehouse1's circulating assets.

Warehouse1's distributors were given the opportunity to recover stock after the company went under, which was taken up by Ingram Micro and Dicker Data.

Before its liquidation, Warhouse1 operated an online retail store and a brick-and-mortar location in Melbourne for four years.

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