PC Co warranty future unclear

The status of PC Company warranties is up in the air after company managing director Colin Brown announced he would not seek either receivership or liquidation of the Hamilton PC assembler.

The status of PC Company warranties is up in the air after managing director Colin Brown announced last week that he would not seek either receivership or liquidation of the Hamilton PC assembler.

Instead Brown has launched a "scheme of arrangement" which should give him more control over the proceedings.

However, Wellington-based IT specialist lawyer Michael Wigley says such schemes can be quite difficult to manage and aren't common.

"It's similar to Chapter 11 in the US, if you've heard of that."

Wigley says a "scheme of arrangement" is governed by the Companies Act which has a section devoted to "compromises with creditors".

"As I understand it, and I'm not that familiar with this particular case, he's repaid the bank loan and therefore taken over the debenture."

This puts Brown in charge of the process rather than leaving it to the bank, which would typically appoint a receiver.

"Receivers would require an indemnity and can be expensive. The alternative is liquidation, of course."

Under Brown's scheme, he will have to sit down with creditors and shareholders and discuss how much can be repaid and when.

"He might say to someone 'you're owed $1000, how about we pay you $500 over the next three months and call it quits'. That sort of thing."

However, such schemes can be difficult to manage, and Wigley says they can fall apart under the strain of trying to please all the creditors.

"They're really not that common because of the difficulty."

PC Company users are still in the dark over who will be handling any warranty issues that arise. The PC Company was a founding member of the Computer Manufacturers' Association (CMANZ), which has a fund to pay for warranty repairs should a member company be placed in liquidation.

Association chair Peter Shirley says he hasn't yet talked to Brown and can't comment until he had spoken to him.

The PC Company's virtual ISP service, PC Connect, is also up in the air, however Hamilton based ISP The Wave is continuing to support PC Connect customers. Managing director Mike Leaver hopes to hear from Brown this week.

Brown did not return Computerworld Online calls.

Join the newsletter!

Error: Please check your email address.

Tags PC Company

Show Comments
[]