The shake-out of the channel continued last week when mail order reseller SMC Computers, considered one of the 'best payers' in the industry, fell into administrative receivership.
Simon Thomas and Ian Cadlock, of chartered accountant Horwath Clark Whitehill & Co, were called in as receivers last Friday after Eurosales Finance, SMC's factoring company, lost patience with the Slough-based reseller.
SMC, a company with a turnover of £17m and 75 employees, is believed to have left debts of almost £500,000.
The reseller, founded by Steve Warren in 1994, is believed to have reached the point of no return last week after battling to stay afloat for months.
Thomas said he was still assessing the situation, but it is unlikely that unsecured creditors, which include Ingram Micro, Datrontech, Ideal Hardware and Northamber, will recover any money. They are believed to be owed less than £100,000 each. He did not know what would happen to staff or when the company will cease trading, but said he was looking at all options including selling the company.
But Eddie Pacey, credit manager at Ideal Hardware, said a combination of market conditions, a lack of direction and cash, and a failure to downsize had put paid to SMC.
"I am particularly saddened by this because the company was very honest, but I was not surprised. If Steve had approached us six months ago, we [the supplier] could have tried to help, but it has gone beyond that," he said. "The company needed to downsize certain parts, but [Warren] was going in the wrong direction and increased his team to try to improve his sales volumes."
Pacey said SMC had made a loss of £460,000 to the end of May. He ruled out the possibility that Simply Computers, which had been in talks with the reseller, would buy the company.
Nitin Joshi, director at insolvency practitioner Pannell Kerr Foster, said his company had been called in last week to advise the directors and put together a rescue package. But before they could devise a plan, Eurosales had appointed the receivers.
A source said that Eurosales was unlikely to recover much of its money because clients would refuse to pay up as their warranties would not be honoured. The question of warranties would also be a problem for any company which bought SMC, which was still a possibility, he said. Eurosales and SMC were unavailable for comment.
First published in Computer Reseller News
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