An anxious E-Store director Steve Spilly faced the firing squad today, $2.52 million in debt and facing possible legal action.
Spilly fronted for the first meeting with creditors since the embattled dotcom sunk into administration last week.
Joint administrators Ron Dean-Willcocks and Ian Purchas revealed the embattled e-tailer has a meagre $44,000 in the bank, with revenue prospects reduced to $100,000 in outstanding customer payments.
The news for creditors also appears grim -- Dean-Willcocks reaffirmed earlier reports in ARN stating that if the company should go into liquidation, unsecured creditors would receive nothing but a tough lesson in bad debt.
"It is my belief that in the event of a forced recovery, there would be no dividend of any significance to unsecured creditors," Dean-Willcocks said.
Adding to the pressure is the threat of legal action against the e-tailer following a call by creditors for an investigation into the final weeks of E-Store's trading. The creditors' legal representative expressed concerns that E-Store may have been trading while insolvent, and that $70,000 worth of unfulfilled purchases may have been a breach of the Trade Practices Act.
Meanwhile, Spilly claimed E-Store's cash-flow was crippled by a supply problem after the company's credit rating was quartered.
E-Store will continue trading under the supervision of administrators with over 95 per cent of stock sold prior to the administration still available for sale. However, with the company expected to burn $40,000 in the next 28 days, Dean-Willcocks is eager to resolve the matter as soon as possible.
The meeting revealed that rival e-tailer Wishlist recently looked closely at buying E-Store, but "creditor pressure meant that they were not interested in proceeding", according to Dean-Willcocks. He said that currently there were seven companies confidentially negotiating for the purchase of the company or its assets.
A "Committee of Inspection", made up of several creditors, including IT&e CEO Bob Johnson and Tech Pacific representative Christine Parkes, was formed to assess a number of issues including whether E-Store traded while insolvent.
The administrators will prepare an independent report on the company, to be delivered to creditors within 14 days. The creditors have 21 days from October 10 before the next meeting, where they will consider liquidation.