Cashback-troubled online dealership Chatterbox.com has gone into liquidation.
A creditor’s meeting was held on March 20, with Lane Bednash from London firm Valentine and Co appointed as liquidator.
Chatterbox.com ran up a £7.5 million cashback bill last year, more than doubling its expected customer redemption rate of 40 per cent, which it claimed 3 had suggested in a business proposal.
It stopped processing new connections in May last year in an attempt to curb the situation. It claimed to have been connecting 2,000 customers a month in 2004, before adopting the cashback model of 40 per cent redemption.
Of the £7.5 million, £901,563 is still outstanding to 3,900 customers. The liquidator has estimated that about £40,000 of these claims will no longer be eligible for redemption since its assessment was conducted.
A customer helpline was set up on April 1 to advise customers of their options.
According to Bednash’s report, 3 owes Chatterbox.com £159,000 in commissions, and Dextra owes it £10,000. But Dextra sales director Angie Simpson said this was incorrect. “We don’t owe Chatterbox anything,” said Simpson.
Despite Chatterbox holding £33,284 in two bank accounts, Bednash said in his report that “given the extent of the liabilities, together with the anticipated costs of winding up, there is no realistic prospect of funds being available to enable a dividend to the unsecured creditors”.
However, Chatterbox.com managing director Kevin Patel said he would still endeavour to pay customers their outstanding cashback.
Patel added that he had received customer feedback that the networks would step in to assist with cashback payments if the business went into liquidation. He said he would take further legal action against the networks if there was no resolution.
“I’m still dedicated to getting those customers paid,” said Patel.