Dick Smith in store decline

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#1464742 6-Jan-2016 22:34

It appears to me the law needs to be updated to further protect consumers in this scenario as secured creditors. The consumers were not intending to take on risk in return for a gain, they were just making a purchase.

MikeB4

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#1464744 6-Jan-2016 22:36

gzt: It appears to me the law needs to be updated to further protect consumers in this scenario as secured creditors. The consumers were not intending to take on risk in return for a gain, they were just making a purchase.

To do this each time gift certificate was purchased an instrument of security would need to be completed. The cost would be untenable.

tdgeek

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#1464746 6-Jan-2016 22:38

MikeB4:
tdgeek: Whats the legality of deciding not to honour the cards? If I walked into the store and told the staff that I am taking this printer and not paying for it, what would happen? If I gave them cash so as to have the gift card holder get the printer next week, then thats ok to say no, sorry?

Even worse for deposits on a lay-by.

Now, if they were insolvent, thats ok, but they aren't as NZ is trading and earning a profit. Strikes me they are having their cake and eating it too. Given that this is unsecured funds, it should be a case of they are valid, but they are an unsecured debt, you will be paid whatever is left, if any as an unsecured creditor. But its been stated that they aren't being honoured. I read a sales staff thought or said it was not honourable now, not necessary later. The funds cannot be not honoured, they are still a debt. Now, if it was stated we cannot honour them legally now and why thats transparent, but everywhere its been implied as final.

NZ DSE is a 100% subsidiary of the Australian parent group, therefore their financial position is that of the parent. If DSE Australia is technically insolvent then so is DSE NZ.

Exactly right. Except they aren't technically insolvent, the secured creditors have taken action to secure their secured funds. If it was insolvent, the liquidator as it would be, would shut the doors to cease bleeding funds. DSE NZ is trading, its profitable. Wages are being paid. DSE NZ will be purchasing stock, no doubt all will be with a Romalpa clause.

This is a good layman read, covering the fact that despite what the media and Facebook wish to rant on about, the gift cards are not worthless. They are an unsecured creditor, its not a case of them not being honoured. The deposits on lay-bys, some of them, might well in fact be usable, see the article. The whole git card discussion comes down to what someone said early on, its only about secured, preferential and unsecured funds. Nothing more. But thats not newsworthy, or Facebook worthy.

http://www.stuff.co.nz/business/industries/75644711/qa-what-dick-smith-customers-need-to-know

Hammerer

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#1464747 6-Jan-2016 22:39

MikeB4: NZ DSE is a 100% subsidiary of the Australian parent group, therefore their financial position is that of the parent. If DSE Australia is technically insolvent then so is DSE NZ.

I'd be very surprised if you are correct. It is normal for subsidiaries to be separate legal entities as DSE (NZ) Limited appears to be (Company registration number: 37602). So it does not automatically inherit the status of the parent company unless the courts conclude that it is being run as a division without the capability to operate independently.

richms

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#1464752 6-Jan-2016 22:45

MikeB4:
gzt: It appears to me the law needs to be updated to further protect consumers in this scenario as secured creditors. The consumers were not intending to take on risk in return for a gain, they were just making a purchase.

To do this each time gift certificate was purchased an instrument of security would need to be completed. The cost would be untenable.

Gift cards are almost all operated by third parties that use the eftpos network to process them. Make them act as a bank for the stored amounts and the retailer only gets the cash on purchase or expiration and that should solve it.

Richard rich.ms

tdgeek

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#1464754 6-Jan-2016 22:46

gzt: It appears to me the law needs to be updated to further protect consumers in this scenario as secured creditors. The consumers were not intending to take on risk in return for a gain, they were just making a purchase.

Agree, good plan, but thats too hard. Your cash goes into the bucket, used to pay wages, power, rents, stock, profit. Its cashflow. Can't realistically earmark funds like that or put them into a trust account. You could argue that the power company might want to be a secured creditor as well. That would cause cashflow to be an issue in a successful business

tdgeek

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#1464755 6-Jan-2016 22:47

Hammerer:
MikeB4: NZ DSE is a 100% subsidiary of the Australian parent group, therefore their financial position is that of the parent. If DSE Australia is technically insolvent then so is DSE NZ.
I'd be very surprised if you are correct. It is normal for subsidiaries to be separate legal entities as DSE (NZ) Limited appears to be (Company registration number: 37602). So it does not automatically inherit the status of the parent company unless the courts conclude that it is being run as a division without the capability to operate independently.

But it is, as per the DSE NZ website, stating the position as in receivership.

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tdgeek

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#1464757 6-Jan-2016 22:49

richms:
MikeB4:
gzt: It appears to me the law needs to be updated to further protect consumers in this scenario as secured creditors. The consumers were not intending to take on risk in return for a gain, they were just making a purchase.

To do this each time gift certificate was purchased an instrument of security would need to be completed. The cost would be untenable.

Gift cards are almost all operated by third parties that use the eftpos network to process them. Make them act as a bank for the stored amounts and the retailer only gets the cash on purchase or expiration and that should solve it.

Thats a plan.

richms

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#1464758 6-Jan-2016 22:50

I really think that any business that wants to store peoples money for use later should have to operate at a better level than they are allowed to. Get some protection for the deposits. Its not like they are paying you any interest on it so the costs of administring it should be more than covered by the interest that the deposits would earn.

Richard rich.ms

gzt

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#1464785 6-Jan-2016 23:53

tdgeek:
gzt: It appears to me the law needs to be updated to further protect consumers in this scenario as secured creditors. The consumers were not intending to take on risk in return for a gain, they were just making a purchase.

Agree, good plan, but thats too hard. Your cash goes into the bucket, used to pay wages, power, rents, stock, profit. Its cashflow. Can't realistically earmark funds like that or put them into a trust account. You could argue that the power company might want to be a secured creditor as well. That would cause cashflow to be an issue in a successful business

No, but they can be closer to the front of the queue somewhere behind staff wages which are first in queue.

Richms suggestion of requiring an escrow is also valid.

The suppliers of any business eg the power company example and goods suppliers are taking a calculated business risk for gain. The consumer is in a different position.

Geektastic

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#1464795 7-Jan-2016 00:23

I love the way that they are saying it will be BAU meanwhile...

Sure. If I want to buy some expensive electronics, I will definitely pick a store that could be a distant memory by this time next year and thus unable to deal with any warranty issues and that has already swallowed customer's deposits and gift card purchases...!

Geektastic

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#1464797 7-Jan-2016 00:26

gzt:
tdgeek:
gzt: It appears to me the law needs to be updated to further protect consumers in this scenario as secured creditors. The consumers were not intending to take on risk in return for a gain, they were just making a purchase.

Agree, good plan, but thats too hard. Your cash goes into the bucket, used to pay wages, power, rents, stock, profit. Its cashflow. Can't realistically earmark funds like that or put them into a trust account. You could argue that the power company might want to be a secured creditor as well. That would cause cashflow to be an issue in a successful business

No, but they can be closer to the front of the queue somewhere behind staff wages which are first in queue.

Richms suggestion of requiring an escrow is also valid.

The suppliers of any business eg the power company example and goods suppliers are taking a calculated business risk for gain. The consumer is in a different position.

I bet banks are first in the queue before anyone. Then Lawyers and the receivers. Then maybe someone else...

Hammerer

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#1464798 7-Jan-2016 00:32

tdgeek:
Hammerer:
MikeB4: NZ DSE is a 100% subsidiary of the Australian parent group, therefore their financial position is that of the parent. If DSE Australia is technically insolvent then so is DSE NZ.
I'd be very surprised if you are correct. It is normal for subsidiaries to be separate legal entities as DSE (NZ) Limited appears to be (Company registration number: 37602). So it does not automatically inherit the status of the parent company unless the courts conclude that it is being run as a division without the capability to operate independently.

But it is, as per the DSE NZ website, stating the position as in receivership.

Just because it has happened does not make it automatic. In this case they chose to do it.

Here's an example, Provenco-Cadmus was placed into receivership without any of its subsidiaries which continued to trade.http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10588439

Detruire

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#1464799 7-Jan-2016 00:35

trig42: How big is the Riccarton DSE?
Would it be big enough to fit a JB HiFi? (JB Stores have a much bigger footprint than the average DSE, but a DSE Powerstore like they have at Sylvia Park, and Manukau would be big enough).
Wonder if JB are interested. Probably not given the small size of most of the stores.

JB bigger than DSE? Really? The JB store in Palmerston North feels half the size of the DSE store.

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#1464800 7-Jan-2016 00:38

tdgeek:
Hammerer:
MikeB4: NZ DSE is a 100% subsidiary of the Australian parent group, therefore their financial position is that of the parent. If DSE Australia is technically insolvent then so is DSE NZ.
I'd be very surprised if you are correct. It is normal for subsidiaries to be separate legal entities as DSE (NZ) Limited appears to be (Company registration number: 37602). So it does not automatically inherit the status of the parent company unless the courts conclude that it is being run as a division without the capability to operate independently.

But it is, as per the DSE NZ website, stating the position as in receivership.

The NZ website copyright notice says "Dick Smith Electronics Pty Limited". I believe the AU and NZ sites have the same backend.

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