Daisytek supply chain breaks

Daisytek Australia went into voluntary administration mid June, as a result of US-based parent company Daisytek International Corporation subsidiaries filing for Chapter 11 bankruptcy protection in the US.

David Cullen, managing director at Daisytek Australia, said no more staff retrenchments or office closures were in the pipeline. The company would continue to trade, with a total 65 staff at its Sydney and Brisbane offices, despite the effect of HP's pullout.

“We're still trading, albeit without HP,” Cullen said. “That's the only major vendor [that's pulled out] and the minor vendors have generally been very supportive and that's been what we've had from our customers and vendors with the exception of HP.”

Although it has been reported that other vendors had also scaled back supply to Daisytek Australia, Cullen said that the scaling back was a decision taken by Daisytek in response to its now-reduced ability to fill purchase orders.

He would not say exactly how much Daisytek business was based on HP products and services, but added that it was “reasonably significant...but less than 50 percent”.

Hugh Scott, corporate communications manager at HP Australia, said that the vendor had spent eight weeks working with Daisytek, but had found the distributor unable to fulfil its commitments to customers in terms of HP product.

“We maintained the business as long as possible. We tried a number of things, including operating on a cash-only basis with them...but unfortunately, given [Daisytek's] worldwide situation it wasn't enough to maintain business sustainability,” Scott said.

The US-based parent company has been conspicuous by its absence from the Australian fray. Cullen said Daisytek International had offered no assistance to its Australian subsidiary since the announcement that the Australian company would enter voluntary administration as a result of the parent company's problems. “I think they have been trying to sort out their own issues,” he said.

PriceWaterhouseCoopers' (PwC) Martin Brown has been appointed as administrator of Daisytek Australia.

Another creditors' meeting has been slated for around July 4, Cullen said. He said there were “a number” of parties interested in participating in any eventuating scenario, whether or not PwC decides to liquidate the company.

Cullen--who has only been with Daisytek six months--is keeping his fingers crossed for continued trading. “We're quietly positive but it's never done until it's done,” he said.

PwC's appointment followed a reported “significant tightening of credit terms by vendors and funding sources in Australia and the UK that have occurred since Daisytek's restructuring announcement in the US...The mounting restrictions have resulted in both subsidiaries' inability to meet current obligations,” according to a company statement.

Daisytek International Corporation has also announced a demand for four million pounds sterling from GMAC Commercial Finance to satisfy obligations arising under a guarantee executed by the company in favour of GMAC. GMAC had not initiated proceedings to collect the guarantee, the company said.