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Undelivered purchases, money possibly lost: Robinsons’ closure leaves customers, suppliers in the lurch

SINGAPORE — Robinsons’ shock announcement that it was going to close its department stores after 162 years has left some in the lurch, with customers unsure if their orders will be fulfilled and suppliers worried that they may never get back hundreds of thousands in sales proceeds.

Undelivered purchases, money possibly lost: Robinsons’ closure leaves customers, suppliers in the lurch

At The Heeren on Sunday, Nov 1, 2020, a section was cordoned off with shoes and boxes strewn on the ground and on the tables.

  • Customers who have made pre-payments for mattresses are unsure if the orders will be fulfilled by Robinsons
  • The department store said this is a “priority issue” that they will try to resolve
  • Some consignment suppliers said they are being owed proceeds from sales made in the past months
  • The appointed liquidator said payment for outstanding proceeds is dependent on the outcome of the liquidation

 

SINGAPORE — Robinsons’ shock announcement that it was going to close its department stores after 162 years has left some in the lurch, with customers unsure if their orders will be fulfilled and suppliers worried that they may never get back hundreds of thousands in sales proceeds.

When TODAY visited the two Robinsons outlets on Sunday (Nov 1), hundreds of customers continued to form snaking queues to enter the department store.

Some shelves were already emptied. At The Heeren, a section was cordoned off with shoes and boxes strewn on the ground and on the tables.

One customer, Mr Kevin Soh, was at the mattress section at Raffles City trying to get more information from a sales staff about mattresses he had ordered and paid for in full that were due to be delivered around November.

The 34-year-old who works in marketing told TODAY he had paid about S$5,000 for the two mattresses in July and was unsure if Robinsons would continue to fulfil the order or provide a refund.

He was handed a printed letter signed off by Robinsons, which said customers’ concerns about the pre-payments and deposits made to Robinsons on mattress sales have been “identified as a priority issue to be addressed with the mattress suppliers”.

“We are scheduling meetings with mattress suppliers on an urgent basis to try and resolve the current situation,” the letter said.

Shoppers throng Robinsons at The Heeren on Sunday, Nov 1, 2020. Photo: Ooi Boon Keong/TODAY

Robinsons said on Friday it has started the liquidation process of its two remaining stores at The Heeren and Raffles City shopping centre, after it closed its outlet at Jem in August.

Without specifying its last day for the two stores, Robinsons said it will remain open in the next few weeks to facilitate final sales for customers before the retailer closes for good.

Another mattress customer who wanted to be known only as Ms Ang, said she had paid the full S$2,300 for a Simmons mattress in October, which was supposed to be delivered this Thursday.

“When I saw the news, I quickly called Simmons and asked if they would still deliver to us on Thursday as promised but they said now Robinsons is not paying them, therefore they can’t fulfil our order,” she said.

In a statement on Facebook on Saturday afternoon, Simmons said it would be meeting with the appointed liquidator, KordaMentha, in the coming week and retail consultants will contact the customers with updates on the issue.

Mattress store Sealy, meanwhile, in a statement on Facebook advised customers to contact their bank to cancel payment to Robinsons immediately and redirect their purchases to them directly so they can fulfil their orders.

SUPPLIERS FACE UNCERTAINTY

Meanwhile, Robinsons’ suppliers are unsure whether the company will repay them for outstanding proceeds from sales in the past months.

These suppliers sell their products on consignment, which means Robinsons pays them only after the goods are sold to customers.

The suppliers said the liquidators have not given any indication whether they will be paid for goods sold over the weekend.

In response to queries, KordaMentha director Hamish Bull said goods sold on consignment after Thursday will be paid in full to suppliers under their “normal trading terms” with Robinsons.

Some suppliers, however, are not taking the risk and have chosen not to continue selling their goods at the department store.

“What people bought on Friday, Saturday and today (Sunday) onwards is too bad for me,” said a kitchen equipment supplier who spoke on condition of anonymity as his company is still owed about S$100,000 for proceeds from the past two months.

The crowd waiting in line to enter Robinsons at The Heeren on Sunday, Nov 1, 2020. Photo: Ooi Boon Keong/TODAY

Ms Vera Ong, the sole proprietor of tableware firm Lovera Collections, told TODAY she is owed S$6,400 for sales made since August.

She said her calls and emails to the liquidator on Friday went unanswered for the entire day. She was only told the next morning she could withdraw her items after showing documents of the consignment agreement.

With just one part-time staff, she had to enlist the help of her husband, father, and a friend to pack up the items.

“When we were there packing, we noticed that some of our things were scattered on the floor… so we don’t know whether there are any loose items,” she said.

In a letter to consignment suppliers on Thursday, appointed provisional liquidator David Kim from KordaMentha said payment for the outstanding proceeds is dependent on the outcome of the liquidation.

A creditors’ meeting will be held no later than Nov 27, he added.

One sticking point the suppliers raised was that they were not given prior notice that the stores were going to close.

A spokesman for Intero Enterprise, which sells menswear and bed linens, said he intends to seek legal recourse because the suppliers were “misled into believing that the business was ongoing”.

Robinsons staff had approached him to plan for year-end promotions in the months prior and he had to order and pay for additional stock from the factories, he said.

“The way that the liquidation happened is very unethical,” said the supplier, who added that this is the fourth time in 38 years that he is going through a liquidation but none was as unprofessionally handled as this.

The firm, which is being owed a “substantial amount”, packed up its goods on Friday. “Nothing was being spelt out to vendors on how the liquidator will (continue to) conduct the business,” the spokesperson added.

As for the unpaid proceeds from earlier sales of consigned goods, Mr Bull of KordaMentha said in his emailed response to TODAY that it is still too early in the liquidation process to identify when the outstanding payment will be made to suppliers.

“We are cognisant that we are in challenging times and we will ensure we are in a position to make a distribution as soon as practicable,” he added.

A long queue of people waiting to enter Robinsons at Raffles City Shopping Mall on Sunday, Nov 1, 2020. Photo: Ooi Boon Keong/TODAY

WHAT LAWYERS SAID

When a company enters insolvency, it will have to pay back lenders based on a prescribed priority.

Secured claims such as secured bank loans will have high priority. This is followed by other preferential claims, such as remuneration of liquidators and employee wages. Outstanding proceeds from the sale of consigned goods are unsecured debt and ranks even lower.

“Among creditors, unsecured creditors rank quite low,” said director Ashok Kumar of BlackOak, a specialist restructuring and insolvency law firm.

This means that these suppliers will not be able to seek payment until the liquidation process is completed and may only get back a fraction of their claim.

As for customers who have made payments for their mattresses, whether they will receive their product will depend on the terms of sale, lawyers said.

Mr Justin Yip, a partner at Withers KhattarWong, advised customers to read their sales conditions carefully to see if ownership of the mattress passes to the consumer upon full payment.

“If so, they should insist on the mattress,” he said.

Refunds, on the other hand, would be more tricky. “It’s unlikely that liquidators will be in a position to pay any refunds in a liquidation,” he added.

“One thing is certain in most liquidations: Don’t expect the creditors to leave with 100 cents to the dollar of what they’re owed. The fact that the company is in liquidation means that it’s financially in a bad state.”

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robinsons department store Covid-19 economy business

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