Crown's reign comes to an end

One computer company's collapse has resulted in a shocked reaction rather than the usual complacent one.

Recently, one industry figure confessed that if a list of the top 100ther than the usual complacent one. UK resellers was compiled a large percentage would be considered as high risk in terms of credit ratings. It should come as no surprise then, that on 5 January, Crown Computer Products joined the legion of resellers which suffer severe financial problems following its crash into administration (PC Dealer, 14 January).

But instead of the usual feeling of resignation that comes as a result of a company drowning in the channel, the general response to Crown's demise was one of shock.

The complex nature of the company, and managing director Malcolm Jamieson, certainly contribute to the vendors and distributors surprised reactions to the administration. Paul Keely, manager at Leonard Curtis and Partners (Crown's administrators), defined this as: 'An order made by a petition of the directors to achieve better realisation of assets.'

One of Crown's creditors, Toshiba, sums up the feelings held by suppliers.

Alan Thompson, PC director at Toshiba, said: 'It was a big shock as the last balance sheet we saw was healthy.' He added: 'In relation to other resellers Crown was very careful as it was all cash up front and credit card payment with its customers.'

But Crown's last reported results for the year ended 31 July 1996 reveal a slight drop in turnover at #29 million compared to a #31 million turnover in 1995. Jamieson admitted: 'Last year was very depressed in terms of sales which is indicative of the atmosphere at the moment. It had been a very poor trading period.'

According to Jamieson, the reason for Crown's demise was a contract which the company secured over four years ago with Vtech Holding, a Hong Kong-based vendor, which supplied PCs to the mail-order company until the end of last year.

When Vtech's manufacturing operation and system distribution arm was sold in June 1997, Jamieson claimed breach of contract. This was denied by the vendor's wholly owned subsidiary Vtech Electronics. Christopher Fisher, company secretary at Vtech Electronics, claimed Crown had stopped buying products from its parent company for over 10 months but this in turn was rubbished by Jamieson.

According to documents filed at Company's House on 24 October 1997, Natwest and an Isle of Man-based company Barkai, of which Jamieson is also a company director, took out a debenture on Crown Computer Products.

The papers filed stated: 'All monies and liabilities which are at the date of the debenture or may thereafter be due owing or incurred from or by the company to Barkai.' Jamieson, who is also a director of a number of other companies (see box) stated: 'This was taken on after the situation with Vtech, Barkai is cash rich so it loaned money to Crown.'

Another complication came in the guise of Haselbrow Finance which still owns 50 per cent of shares in Crown. Although Jamieson insisted the relationship with Haselbrow had no bearing on the administration situation, he refused to make any further comment on the finance company at all. Equally when Melville Morris, director of Haselbrow, was contacted by PC Dealer, he refused to say anything.

Commenting on the subject of trade indemnity, Andy Gass, finance director at Computer 2000, said: 'We will make some retention of title stock of goods which are still on the premises.'

However distributors and vendors do stand to lose out from such situations like this since insurance premiums rocket after a bad debt is covered.

How much creditors are owed remains unknown, although industry estimates put it at #4 million.

The company is already up for sale and it seems Crown's legacy cannot be ignored as the consequences for both vendors and distributors have yet to be measured.

MALCOLM JAMIESON

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