Edge collapses

Edge collapses

"We feel cheated and disappointed by Edge as we have been loyal to them for a long period of time." Amanda North, director of Adelaide reseller Chelstec spoke for thousands of other resellers, dealers and service providers left out in the cold by the swift and sudden collapse of Johnson Wang's Edge Technology Group last week.

Registered liquidator Lawler Davidson is working on behalf of the company's secured creditor, Cash Resources Australia Pty Ltd, to chase outstanding debts of close to $1 million. The group as a whole carries debts of over $40 million.

Andrew Wiley, a partner from Armstrong, Wiley and Co, is the company's voluntary administrator, responsible for a range of companies affiliated with the Edge group.

Attention has now turned to the cause of Edge's spectacular fall at a time when sister company eisa remained suspended from trading on the ASX and Johnson Wang is believed to be holed up in China.

Chelstec's North suspects "they were having money troubles because of eisa", supporting some who believe eisa's shares were used to support the ailing company.

However, Lawler David-son partner Chris Wykes told ARN: "There is no direct link as such, as far as I am aware." eisa is not listed as an Edge group creditor, he offered.

The most plausible cause points to spiralling debts illustrated by Edge's failed North American operations in 1999. A recent report in The Sydney Morning Herald points to a Supreme Court writ of over $15 million from Microsoft for software it had not paid for, and other damages claims from companies such as the Continental Insurance Company.

Wykes reports that now the group is no longer trading, "My role is to secure and realise the assets and settle the debt to the secured creditor." He was unable to estimate how long it will take to recover the company's assets. "At book value there are substantial assets in the group."The two primary debtors chased by Cash Resources Australia are Edge Computer and Edge Technology. "Between those two companies they are owed not much short of a million dollars," he said.

At the time of going to press, the future of the Edge group's New Zealand operations was unclear. An ARN source reported Edge Technology was attempting to ship its remaining stock across the Tasman.

Meanwhile, Edge's communique from head office to employees last week was accompanied by a directive for all staff to offload remaining stock urgently at cost price.

Darren Bennett, sales manager at Edge Newcastle, is one of the hundreds of Edge Group employees facing termination. He described the situation as the "Mushroom Theory". "I'm fed on bullshit," he mused. "We are selling everything at cost at the moment so we can get out of here as quick as we can."Bennett said resellers must now find new suppliers in place of Edge Technology for its KTX brand of PCs, notebooks, components, imaging, multimedia, networking, peripherals and storage products, widely regarded as unreliable.

Bennett said resellers must now deal directly with the manufacturers of its products, particularly where warranties are concerned.

For North, the Edge Group's demise ends a five-year relationship. "We believe that the apparent Edge collapse will have a great effect on us in terms of warranty. We feel it is our duty of care to our customers to maintain their warranty - and now Edge has left us high and dry to deal with this," she commented.

"After consultation with Consumer Affairs it appears that if Edge imported the product that we sold, and Edge are not in business, we are responsible for maintaining the customer's warranty. We realise that many resellers will choose to cease trading in their current form, and reform under a new name just to avoid having to maintain these warranties. We want to be fair to our customers, but it appears this situation may cost our business a significant amount of money. But what option do we have?"Edge Technology's general manager, Emily Ballantyne sent an e-mail to Edge Australia Branch Managers and Edge NZ last Thursday confirming the company is in voluntary administration and was expected to be liquidated this week.

"We will endeavour to look after everyone as best we can and hopefully you will all get your entitlements, but it is now out of our hands and may take up to a month to be sorted out," she wrote in the e-mail leaked to ARN (see breakout box on page 6).profileEdge group fact fileWorldwide staff - 600Edge Technology Revenues (source: Inform)1998/99 - $120 million1997/98 - $160 million1996/97 - $430 million1995/96 - $380 millionA/NZ offices: Sydney (Global HQ), Melbourne, Brisbane, Adelaide, Perth, Tasmania, Newcastle, Townsville, Auckland, Wellington, Christchurch.

Asian/Middle East offices: Kuala Lumpur, Guangzhou, Beijing, Shanghai, Chengdu, Dubai.

North America offices: Dallas, Toronto, Vancouver.

Europe offices: Netherlands, Paris

Secured creditor: Cash Resources Australia Pty Ltd. Owed close to $1M by Edge Computer and Edge Technology.

Receiver: Lawler Davidson, for Edge Computer, KTX Technology, Edge Technology, Edge Property and Edge Holdings.

Administrator: Armstrong, Wiley & Co for OBM Computer, Computer Wholesalers, LAN Communications, Heartland Computer Technology.

Ballantyne's staff e-mail

Below is the leaked e-mail from Emily Ballantyne, general manager of Edge Technology, to staff on Thursday June 8:Dear All,Today is a very sad day indeed. As most of you may already know, today Edge in Australia has gone into Voluntary Administration. Most likely, the company will be liquidated within the next seven days.

On behalf of the management of Edge I want to thank you all for your hard work, support and loyalty to the company for the past 10 years. We will endeavour to look after everyone as best as we can and hopefully you will all get your entitlements, but it is now out of our hands and may take up to a month to be sorted out.

For those of you who are staying on for a little while longer, please keep collecting as much of the debtors money as possible and keep banking daily.

The more money we get in, the better it will be for all of us.

I hope Edge NZ can be strong and survive on its own two feet.

I will miss you all very much. Good luck to all of you in the future.

Yours sincerely,


Editor's note: What impact does Edge Technology's collapse have on you, the reseller? e-mail to voice your opinion.

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