Z-Tek's back, and no-one's happy

Z-Tek's back, and no-one's happy

Resellers in South Australia claim they are being cut out of the market by the alleged re-emergence of the Z-Tek business, now allegedly trading in South Australia under the name of IT Warehouse.

As previously reported in ARN, Z-Tek Computers Pty Ltd was forced into administration earlier this year in Melbourne. Andrew Dunner of Dunner and Associates, the administrator, said large amounts of the business's stock disappeared immediately prior to going into liquidation.

But operating out of Z-Tek's old warehouse in Melrose Park, a retail "component supermarket" emerged, trading as "IT Warehouse." It has also opened an outlet in Port Adelaide, advertising products at prices below what competitors say they would pay for them.

"IT Warehouse is Z-Tek," said Bob Johnson, managing director of South Australian-based retail chain A and R Computers. "They lean an A-frame out the front calling it IT Warehouse, but it's Z-Tek staff operating it, and all their gear still has Z-Tek on it."

Jay Perkins, manager of IT Warehouse (owned by Z-Tek Computer South Australia Group) said the business is a separate and independent identity to the defunct Z-Tek Computer Pty Ltd. He said the two businesses have different directors and shareholders.

Perkins said IT Warehouse has "turned the retail game around", and that he will sell below cost on some products if it means getting customers in the door.

"Once the pricing hit the market, every dealer ran screaming to their supplier," said Patrick Bouhamdan, of Port Adelaide reseller Cherry Computers. "Already, in a matter of weeks we have customers comparing our pricing with that of IT Warehouse. Many of their selling prices are well below our cost price, so we can't even match them."

Disappearing and reappearing stock

Competing resellers speculate that to sell at such low prices, IT Warehouse may be selling stock that disappeared from Z-Tek Pty Ltd's warehouses immediately prior to the company being forced into liquidation.

"I wouldn't be surprised if a vast majority of [IT Warehouse's] stock was what went missing at Z-Tek," said Johnson.

When asked whether any of the stock in IT Warehouse's shelves were the same as those removed from Z-Tek Computers Pty Ltd, Perkins said he "does not believe so".

"Let me stress again that we are not the Z-Tek that is in liquidation," he said.

Dunner, who is attempting to liquidate the Z-Tek Computers business that flopped in Melbourne, said it would be very difficult for him to ascertain whether the stock being sold by IT Warehouse is the same stock that was pulled from the Z-Tek warehouse, as Z-Tek kept either very poor records or no records at all.

"I have not been able to locate anything that indicates what stock came in and out of Z-Tek," he said.

$50 million turnover

"But these guys were doing quite a volume, about $50 million turnover. They always had about a month of stock - $1 million to $1.5 million worth at any time. When a warranty issue came about, the only way they could verify it was their stock was from little stickers they put on the componentry. There was never any reference to stock numbers."

Dunner is now preparing a case for the Federal Court of Australia in Melbourne, based on the Z-Tek stock and financial records he is holding from a search and seizure warrant the court granted him in August.

"I will be seeking for the court to recognise that none of the six or so operations of Z-Tek are separate legal entities," he said. "They are all a part of one corporate entity that is Z-Tek Computers Pty Ltd [which is under liquidation]."

"It is not an easy case. Their accounting records are not complete, and there are little or no records available about stock," he said. "Z-Tek will be given the opportunity to explain their position in the courts."

Perkins said that other channel companies in Adelaide were unfairly trying to damage his reputation as his operation was pricing them out of the market.

"These guys aren't doing any business, so they have got nothing better to do than try and bring us down in other ways," he said.

"Both of those companies are in financial difficulty and have got their noses out of joint."

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