Edge resellers line up for warranty fight

"Kill the market, kill the market". It was Jen-Tse Johnson Wang's anti-competitive catchcry, but according to disgruntled former staff, it's ironic that's exactly what he did to Edge's market.

For years the man had driven Edge employees with promises of "you do this and you will make a lot a money", one former staffer reported.

But as the extent of the Edge group's financial mess becomes apparent, receiver Lawler Davidson is lining up to take on each of the company's customers, or trade debtors, who report they intend to withhold payment citing warranty concerns.

The Edge group's collapse, as reported in ARN last week, has left Edge owing creditors between $30 and $40 million, including over $15 million owed to Microsoft apparently in unpaid licensing fees.

A meeting of around 50 creditors last week points to the ultimate liquidation of the company unless Wang steps in with an offer for his creditors.

Alan Topp, partner at appointed administrator Armstrong Wiley & Co, said regardless of how much Edge owes creditors, the real issue is how much money it can extract from trade debtors to satisfy creditor Cash Resources Australia (CRA).

Once CRA has its money, Lawler Davidson's role will be complete, leaving Armstrong Wiley & Co to sort through issues with the remaining debtors and creditors, Topp said.

Recovered loans from inter-company trading are also expected to yield some money for creditors, but the confusing paper trail is not filling Topp with hope.

"Over the last couple of days we've had conflicting figures coming out of the computer," he said.

Topp could not detail the amount of money he expected to uncover. "All I know is there are inter-company loans," he said.

According to one source, Edge is owed well in excess of $1 million by resellers. But resellers in contact with ARN have indicated an unwillingness to settle their accounts with Edge, given the looming threat of customer warranty claims they must shoulder alone.

"Who will honour the warranties we have selling to our customers now?," asked one reseller. "Why should we pay what we owe when we may have to pay for all the failed products during the warranty period?"

Lawler Davidson partner Chris Wykes confirmed Edge's demise means "warranties will not be honoured". As a result, he said issues with so-called trade debtors will be assessed on a "piecemeal basis".

Dick Smith Electronics is one of the group's larger customers currently in negotiations to reach an agreement on exactly how much of its account it will pay based on forward liabilities expected to arise from warranty claims.

Jeff Glover, Dick Smith's MD, refused to comment, with a company spokesperson referring to it as an "internal matter".

Another large Edge Technology customer in contact with ARN also owes the company a significant sum but has decided to join the ranks of resellers withholding payment.

"We will be looking to not pay our bill, or a percentage of our bill based on our warranty liabilities," the reseller said. "The real liability issues over the next 12 months will be horrendous."

Meanwhile the reseller, who has access to some company files, claims to have seen documents that detail $1.9 million in outstanding payments due from resellers around the country.

The source said Edge is carrying $2.5 million in stock, around $60,000 of which is old, useless stock.

"I can tell you right now that figure ($2.5 million) will be at least $1 million over valued," he said.

See page (70) for letters to the editor concerning Edge.

Warranty worries remain unresolved

Unable to comment before ARN's print deadline last week, Edge Technology general manager Emily Ballantyne accepted our offer to directly address resellers' warranty concerns:

"I am also concerned about resellers' warranty on goods purchased from Edge, especially in regards to assembled computer systems. I have raised this issue with the receiver, Chris Wykes, who has told me ‘to ensure that he achieves the highest possible realisation from the outstanding debtors, the issue of warranty will have to be addressed'. My e-mail to the branches was sent before I was aware that Cash Resources Australia, Edge's only secured creditor, had appointed a receiver. Therefore my e-mail was sent to notify the branch managers of the appointment of the administrator and that the administrator had advised that a couple of staff may need to stay on to keep collecting from the debtors, and to pack up all the stock and office equipment. Collecting our debtors' benefits not only the staff (who are owed severence wages) but our creditors too, as this is one of the company's assets."

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