Dick Smith liquidators accuse Synnex of preferential payments

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Dick Smith liquidators accuse Synnex of preferential payments

Synnex has been dragged back into the seemingly never-ending fallout around failed electronics retailer Dick Smith's collapse in 2016.

The distributor's financial report lodged for the financial year ending 31 December 2017 revealed that in 2018, Dick Smith's liquidators demanded up to $15 million from Synnex for alleged unfair preferential transactions.

According to the report, Dick Smith's liquidators alleged that the payments took place between July 2015 and 4 January 2016, the six-month period immediately before Dick Smith went under.

Synnex said in its financial report that its directors concluded that there were no preferential payments received and that its external lawyers were in process of establishing a defence to respond to the liquidators.

Dick Smith fell into administration on 5 January, appointing McGrathNicol as administrators and then liquidators. There has been much speculation over what led to the company's failure though at the time of the administration, Dick Smith cited pressure to attain short-term funding as a major factor.

The closure has also come under scrutiny from disgruntled shareholders that have launched multiple class action lawsuits who didn't get their investment back when Dick Smith was liquidated. Dick Smith's board of directors were all subject to examination by the Supreme Court of NSW to determine whether there was any wrongdoing over their management of the business.

Before the administration, Dick Smith had an estimated $400 million in unpaid debts, including $140 million to its bank lenders and $250 million to unsecured creditors. The closure resulted in close to 3000 staff in Australia and New Zealand losing their jobs.

Synnex declined to comment further on the matter. CRN also reached out to McGrathNicol, who did not respond at the time of writing.

It's not the first time the distributor has been brought up during Dick Smith's ongoing legal drama over its closure.

In October 2016, former chief executive Nick Abboud told the Supreme Court of NSW during an examination that Synnex had stopped supplying iPads to Dick Smith in November, right before the busy Christmas trading period and two months before it sank into administration.

Abboud claimed that there were delays in inventory getting from Apple to Synnex then to Dick Smith, denying that the retailer failed to pay its invoices.

He also told the court that Dick Smith relied on Apple as one of its key suppliers despite being an infamously low-margin brand for retailers and that it extended its facility with Macquarie Bank by $10 million prior to its collapse to purchase more Apple inventory. Dick Smith was unable to repay its debt back to Macquarie, leading to the administration.

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