Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Tiny Computers 'traded while insolvent'

The long, drawn-out collapse of the PC retailer has infuriated creditors

Heather Tomlinson
Sunday 14 July 2002 00:00 BST
Comments

Tiny Computers, the failed PC retailer, is believed to have been trading insolvently for more than a year before going into administration, its creditors have been told.

The company's administrator, Grant Thornton, told creditors that the company appears to have become insolvent in late November 2000. However, the company did not go into administration until 29 January 2002, having amassed an estimated £45.5m in debt.

A report from Grant Thornton given to creditors in recent weeks stated: "On the basis that by November 2000 the company had net liabilities, poor liquidity and the seasonal upturn in trading had not occurred, it would seem reasonable that the directors could have concluded that the company was insolvent."

Tiny was hit with a double whammy in the run-up to its collapse. Total PC sales in the UK were falling, and other retailers such as Gateway were entering the market. Despite the appearance of insolvency, the company spent around £23m on advertising in 2001, keeping hold of its 15-per-cent market share. Despite sales of nearly £200m, its trading losses were £34m in the year ending January 2002, according to the report.

The company's assets were bought out of administration by Time Group, a rival PC company, in January. However, there are still creditors who are owed money from the original holding company of Tiny – OT Computers.

The administrators have prepared a report on the extent to which OT's directors will be liable for creditors' losses, but this has not been made public "to avoid prejudicing any subsequent legal actions", creditors have been told. The company's directors included Garo Molozian, finance director, and Andrew Walwyn, managing director. Grant Thornton is also preparing a report for the Department of Trade and Industry.

The administrators are also investigating whether certain creditors were given preferential treatment in the payment of their debts, in the period when the company was insolvent.

Creditors have said they are furious at the collapse of the company. In particular, customers with extended warranty contracts have had problems in getting their computers repaired.

It is not known who the beneficial owners of Tiny are as the company was based in Jersey. However, Rodger Sandiford, a Swiss-based millionaire, set the company up in 1981. "I have fully co-operated with [the administrators] for nearly six months," said Mr Molozian. "In my opinion and the whole of the Tiny board, the company was not insolvent in November 2000. In my view, it was never insolvent until 21 January, because we were negotiating the sale of its shares. I do not believe we preferred any creditor to the detriment of any other."

Mr Walwyn was unavailable for comment. However, in a statement, the board of directors said: "The directors worked tirelessly to secure a favourable outcome, in the most difficult of trading conditions, always mindful of the best possible outcome for their customers and employees."

Grant Thornton said: "We are not in a position to comment at this stage. Investigations are continuing."

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in