Distributors call for action against Micro IT Components

Several high-profile distributors were left out of pocket by VAR's demise

Shut up shop: Micro IT's closure has resulted in channel firms losing hundreds of thousands of pounds

The distribution channel has expressed concerns over the outcome of a recent insolvency case involving Slough-based VAR Micro IT Components.

The VAR went into liquidation earlier this month, leaving its creditors out of pocket to the tune of £172,229, after its director confirmed that the company’s book debts of £248,000 were unlikely to be recouped.

According to a creditors’ report filed by Wilson Field -the company overseeing Micro IT’s liquidation - several distributors have been stung by the firm’s demise, including Bell Micro, Avnet, Ingram Micro, Computer 2000 (C2000) and Hammer.

The firm was set up three years ago, and was - according to Wilson Field’s report - making a profit until March 2010.

However, plans put in place by director Muhammad Furquan Zubair to drive sales and expand the business by introducing extended credit facilities to customers were not sufficiently financed. This resulted in cash flow problems when customers failed to pay up on time.

The report also claims that Zubair attempted to clear some of the debts by selling stock totalling £51,000 to a company called Riz Computers, but the payment for the goods bounced and was never received.

Eddie Pacey, European director of credit services at Bell Micro, said that although the financial loss his firm suffered (£9,000) was not huge, the explanation provided by the director was 'laughable'.

He said “The fact the entire company book debts of Micro IT are not recoverable beggars belief and the apparent sale of stock to an obscure company who gave them a rubber cheque also raises eyebrows.

“The report outlining failure stretches credulity to its extremes and the liquidator is duty bound to investigate the directors' actions fully.”

ChannelMoney founder Nitin Joshi said the case was most concerning for him because of the number of his clients that are losing out because of it.

“I will be asking the liquidator to investigate the directors' conduct, including that of a director who resigned a few weeks ago," said Joshi.

“The distributors involved will now review their credit facilities with all parties connected with the company because they are angry and they want answers and redress.”