Liquidators for failed reseller Warehouse1 have indicated that the company may have traded while insolvent as early as seven months before its collapse.
Warehouse1 sank into liquidation in February after four years of operating an online IT retail store and brick-and-mortar location in Melbourne, appointing SV Partners to handle the liquidation.
While SV Partners said its investigation was still ongoing, there were a number of factors suggesting insolvent trading, including balance sheets that recorded net asset deficiencies as early as July 2017, and negative working capital and liquidity ratios.
Warehouse1 started incurring trading losses from the start of 2017, if not earlier. According to the liquidators, 52 percent of the company's payables were outstanding for more than 60 days by October 2017.
"We however note that our investigations are ongoing and should any further offences be identified, they will be included in any report to ASIC," the liquidator said in its report to creditors.
"We are of the view that the company may have traded whilst insolvent from July 2017, if not earlier."
The liquidators investigation also unveiled that eight creditors may have received preferential payments close to $4 million, though SV Partners is yet to undertake a formal review.
The creditors report identified a number of factors leading to Warehouse1's insolvency. Chief among those being ongoing problems with the company's internal software platform which hindered its website speed and marketing. In addition, payment intermediaries caused refunds to occur without Warehouse1's consent.
Warehouse1's director also blamed factors like an unexpected drop in sales, heightened competition and preferential pricing given to competitors.
The report revealed that Warehouse1's unsecured debts totalled $3.6 million, and one secured creditor, Commonwealth Bank, was owed $468,000.
A number of Australia's largest distributors were listed as creditors, including $1.7 million owed to Ingram Micro, $475,000 to Dicker Data, $235,000 to Alloys, and smaller debts to Synnex, Bluechip Infotech, Dynamic Supplies, Leader Computers and MMT.
SV Partners ran a campaign to sell the company's remaining stock, which was sold to an unnamed buyer for $127,000. Distributors with security interests relating to retention over stock were given the opportunity to recover stock from Warehouse1. Dicker Data recovered $239,000 in stock, while Ingram Micro, Synnex, Bluechip, MMT and Dynamic Supplies are yet to identify their stock.
Warehouse1 still owes $713,000 in refunds to 821 customers, though SV Partners previously confirmed to CRN that those customers would not receive refunds for products they paid for but did not receive. Instead, the liquidator suggested customers contact their credit card company to dispute the transaction.
The next meeting of creditors is scheduled for 31 May in Melbourne, where creditors will consider approving the liquidator's remuneration and appoint a committee of inspection.