The $1.6 million collapse of a timber flooring business has left dozens of angry customers thousands of dollars out of pocket with no chance of getting their money back.
Perth Floor Centre shut its four retail outlets across the metropolitan area last month without notifying customers. The company and associated wholesaler Pulsewood Australia, operated by brothers Steve and Robbie Howley, went into liquidation on Monday.
The retailer has debts of $815,000 and the wholesaler $773,000, according to information received from the companies by liquidators Melsom Robson.
The businesses assets are estimated to be well below $100,000.
It learned that 117 customers paid deposits for timber flooring of up to 50 per cent, worth a combined $540,000, and have nothing to show for it.
Under consumer laws, it is illegal to demand a deposit of more than 6.5 per cent for this product. There are also at least five employees owed about $50,000 in wages and superannuation.
Perth Floor Centre stores in Belmont, Balcatta, Jandakot and O'Connor closed their doors on July 16. It is understood they were taking deposits from customers right up until the closures. The business failure follows disputes in court and the State Administrative Tribunal between Perth Floor Centre and homeowners unhappy with the quality of flooring supplied by the company.
State Government agencies have also come under fire from the timber flooring industry for failing to act sooner over complaints against the retailer.
Peak body, the Australian Timber Flooring Association, revoked Perth Floor Centre's membership in May because of the excessive deposit-taking. ATFA inspectors have made about a dozen adverse findings about the retailer's floors.
ATFA president Paul Kiely said authorities were first made aware of the problems about a year ago. "It's terrible for the industry," he said. "It's terrible for those who do the right thing."
The Cox family, whose Kelmscott home is being rebuilt after being destroyed in the bushfires last year, lost a 40 per cent deposit of $6000 at the Jandakot store in May. "We haven't really managed to move on with our lives through the fires and now this is just another setback," Phillip Cox said.
Janet Burke, of Beeliar, said she would have to replace $22,000 worth of flooring because of flaws with the timber, which was also too thin to be sanded down.
Commissioner for Consumer Protection Anne Driscoll said the store closures highlighted the dangers of paying too much upfront for goods and services.
The Howley brothers could not be reached for comment.
A creditors meeting will be held next Thursday. Customers owed money have been advised to call Melsom Robson on 6242 0700.