The liquidator appointed to oversee the affairs of embattled warranty provider United Warranties has revealed the company has no money with which to pay back its customers or partners.
United Warranties officially went into liquidation on Monday after weeks of being missing in action. Partners and customers had been unable to contact the company since early June.
Its mysterious absence fuelled speculation the company was on the brink of collapse, despite at least one of its partners being told by UW’s national sales director there was “nothing wrong” and the company was “going strong”.
Liquidator Matt Byrnes of chartered accountants Grant Thornton today told CRN investigations were preliminary but confirmed partners and customers were unlikely to see their money again.
“The company has no funds to pay anybody back,” he said.
“There’s some stock and potentially some debts owing to the company, but the investigations are preliminary, and as part of that we need to look at the circumstances leading up to our appointment.”
Byrnes estimates between 200 and 300 warranties are outstanding in the market, according to the company’s inventory, but acknowledged there could be many more.
“We haven’t quantified how many warranties are out there but there are many thousands,” he said. “Some haven’t even triggered yet because the products will have only been recently sold.”
Online PC retailer Tech4U is one of many partners to be affected by the UW fallout. The reseller was closely tied to United Warranties until June, when it began to suspect something wasn’t right and stopped ordering its products.
In June, Tech4U sales supervisor Fred Porter told CRN he had been advised by UW six months ago partners were safe should the warranty provider go under, thanks to a “pile of millions” the company had as a safety net.
Byrne told CRN that was not the case.
“There’s certainly not a million dollars anywhere at this stage that we can see.”
Byrnes confirmed the company had “some stock” including minor motor vehicles and other assets that Grant Thornton was in the process of valuing. He said some debts owing may also be able to be realised but could not confirm value at this preliminary stage.
Tech4U, and many other of UW’s partners, have stopped recommending the company to customers and removed any references to United Warranties and its products.
Direct UW customers are able to submit claims to the warranty provider for reimbursement, as unlikely as they are to be met.
Byrnes said UW is unable to honour claims made by partners, and it is therefore up to partners to decide how to approach their own customer claims.
“United Warranties is liable but it is in liquidation. If there’s no funds at the company to meet those claims, then parties who have got a claim for an extended warranty miss out.”
Byrnes expects to have a clearer picture of the group's financial situation by the end of next week.
The United Warranties group includes United Maintenance and United Electrical Holding Company.