Edge resellers line up for warranty fight

"Kill the market, kill the market". It was Jen-Tse Johnson Wang's anti-competitive catch cry, but according to disgruntled former staff, it's ironic that it's exactly what he did to Edge's market.

For years the man had driven Edge employees with promises of "you do this and you will make a lot a money", one former staffer reported.

But as the extent of the Edge group's financial mess becomes apparent, receiver Lawler Davidson is lining up to take on each of the company's customers, or trade debtors, who report they intend to withhold payment citing warranty concerns.

The Edge group's collapse, as reported in ARN last week, has left Edge owing creditors between $30 and $40 million, including over $15 million owed to Microsoft apparently in unpaid licensing fees.

A meeting of around 50 creditors last week points to the ultimate liquidation of the company unless Wang steps in with an offer for his creditors.

Alan Topp, partner at appointed administrator Armstrong Wiley & Co, said regardless of how much Edge owes creditors, the real issue is how much money it can extract from trade debtors to satisfy creditor Cash Resources Australia (CRA).

Once CRA has its money, Lawler Davidson's role will be complete, leaving Armstrong Wiley & Co to sort through issues with the remaining debtors and creditors, Topp said.

Recovered loans from inter-company trading are also expected to yield some money for creditors, but the confusing paper trail is not filling Topp with hope.

"Over the last couple of days we've had conflicting figures coming out of the computer," he said.

Topp could not detail the amount of money he expected to uncover. "All I know is there are inter-company loans," he said.

According to one source, Edge is owed well in excess of $1 million by resellers. But resellers in contact with ARN have indicated an unwillingness to settle their accounts with Edge, given the looming threat of customer warranty claims they must shoulder alone.

"Who will honour the warranties we have selling to our customers now?," asked one reseller. "Why should we pay what we owe when we may have to pay for all the failed products during the warranty period?"Lawler Davidson partner Chris Wykes confirmed Edge's demise means "warranties will not be honoured". As a result, he said issues with so-called trade debtors will be assessed on a "piecemeal basis".

Read the full report in the June 21 issue of ARN this week.