3/31/2008 12:04:00 PM
Cashback retailer Chatterbox goes into liquidation
West London and online retailer Chatterbox has gone into liquidation with debts of just over £1m after it struggled to pay outstanding cashback to customers since May last year.
The London-based retailer still owes £900,000 to 3,800 to customers – largely on 3 – with the rest of the outstanding debt owed to suppliers and company boss Kevin Patel who injected £180,000 into the business.
Accountants appointed to wind up the business say there is no likelihood of them being paid.
Creditors were informed of the decision to appoint a firm of accountants last week.
With only £40,000 of assets remaining, Lane Bednash of accountants Valentine and Co. said it would be uneconomical to redistribute it.
Chatterbox MD Kevin Patel said he had been trying to repay as many customers as he could for several months while downsizing the operation.
In 2004 the company was connecting 2,000 customers a month, but it stopped taking on any new customers in May last year when it ran into trouble, Patel said.
Since then, Patel has been campaigning for networks take a share of the responsibility for the fallout created by collapsed cashback retailers, claiming that networks encouraged retailers to adopt a 40% redemption model.
Chatterbox first wrote to customers in September last year to say the company’s resources had been ‘drained’ due to the redemption model. A second letter was sent in December last year to ask customers to put pressure on the networks.
Patel said: ‘I asked all 25 people present at the creditors meeting if they thought the networks were responsible, and they all said “yes”.’
Patel said the networks had hinted that they will step in and pay customers if the business went into liquidation.
And Patel said that if no satisfactory conclusion was reached legal action in the form of a class action could be pursued, on the basis of anti-competitive practices and misrepresentation through misleading cashback advice.