Trading out means that they sell cars to NEW buyers. Unfortunately, that's the way it works.Originally Posted by Darth
Earlier this year, one of my clients got caught up with Clive Peters. He had paid a deposit on a new widescreen TV, then CP went belly up. They were still trading and selling floor stock when the liquidators moved in, yet he was not able to change his order for one of the floor stock units. He could buy a floor stock unit outright, but what he paid as a deposit on the TV he wanted could not be taken off the price of a new purchase. He lost his total deposit.
Trading out is to maximise the return to the secured creditors. As such, fulfilling existing orders that might have been heavily discounted to get stock moving is not going to achieve as much as selling stock held (even if a deposit was taken on it) with no discount.
One unsecured creditor might not have much sway voting at a creditors meeting, but it is amazing how one person speaking out can change the mood of such a meeting. When I got caught up in such a mess, at the first meeting we were told we would get 75 cents in the dollar if things were wound up immediately. We were told that if we let the business trade out this return would be higher. We foolishly believed this and around 12 months later ended up with less than 20 cents in the dollar. Any creditor can issue a wind up notice (something I learned about well after the loss I suffered).
My accountant refers to liquidators/receiver managers as the "black sheep of the accounting profession". Apparently when they get their degree, they hand over their souls. They act in the interests of the secured creditors only. The rest get to fight over the scraps.
The thing about deposits is that you only ever put down a deposit if the amount is what you are prepared to lose. If you are not prepared to lose the deposit, then don't put it down. Unfortunately you must do this at times, so put the absolute minimum down. Increasing the deposit will NOT get you your purchase any sooner (no matter what you are told).
You can get good people in business but they are rare.
Way back in 1982 I bought my first colour TV. I got a bank cheque and took it over to the store on Thursday evening and was told that I would have it delivered on Monday. On Friday morning I received a call from the salesman who informed me that they were under instructions to take all monies offered, even though they were to be placed in administration the next day. He wanted to confirm my address as he had not actually processed the cheque, but held it. A few days later I received the cheque. Now $800 back in 1982 was a lot of money. Unfortunately this is probably very unlikely to happen now.
Reply With Quote
Bookmarks