Douglas Wood and Anna Smith paid a deposit for a heating system from Right House, but the company collapsed.
A Wellington couple have been stung by the collapse of energy efficiency company Right House last week.
Anna Smith and Douglas Wood paid a one-third deposit on a new heating system worth thousands, but have been left hanging with no idea if they will get the job done or their money back.
Smith said they were "really shocked" by the failure of Right House.
"There was nothing to suggest the company was in any trouble," she said. "We are deeply disappointed because we have put down a third of the cost.
"We were looking forward to having it all in place and nice and warm for next winter."
The collapse of Right House saw 133 staff laid off around the country last Wednesday and the company owed $10 million to creditors. However, Right House was left homeless yesterday after the liquidators and remaining Right House staff were thrown out of their Wellington headquarters building by the landlord.
That meant they were unable to complete the sale of the insulation part of the business and could not access company files.
Late last year, Right House told Smith they were too busy to install the new high efficiency heating system before Christmas, so the couple put it off till this year. The job was due to start next week, three months after they made the initial deposit, and the radiators had already arrived last month.
But now Right House has failed and Smith and Wood have been left unsure where they stand.
"It was so unexpected . . . the impression was there was more business than they could do," she said.
The company has not contacted the couple yet, even though the work was due to happen in just a few days.
"You would have expected an email by now," she said.
The first they knew of the company's problems was a story on the Stuff website on Thursday night.
"We have also paid for all the preparatory work like upgrading our gas pipes," Smith said.
"The salesman we dealt with said they were involved in a lot of new builds which means a number of builders are likely to have been caught as well."
Given the hardware was in Wellington, Smith hoped the job would be completed, as planned.
"(We hope) the deposit holds good and we pay the rest of the money," Smith said. "That would be ideal", if another gasfitter could fit them.
Right House liquidator John Fisk of PricewaterhouseCoopers said legally the deposit would be an unsecured claim against the company and the couple would have to stand in line with other unsecured creditors.
But Fisk said they would need to look at the contract and see if it was possible the work could be completed so that would be to the benefit of all creditors.
If the heating part of the Right House business was bought by another firm, that new company might complete the contract with the deposit "paid and lost", presumably not making any money out of it, Fisk said. He said such cases were "quite fact specific", but the "bottom line" was that usually customers who paid a deposit were unsecured creditors, unless equipment was bought on their behalf and just stored by Right House.
The process of making a claim could take months, and it remains unclear how many cents in the dollar creditors might be paid.
"It is the risk you take when paying a deposit to any business."
However, if the deposit was paid by credit card, the customer might be able to talk to their credit card company about the payment.
It was the only such case Fisk had been told about so far, but he said he would not be surprised if there were more.
A letter would be written to creditors soon, explaining the process for making a claim.
However, that had become more complicated yesterday because the landlord of the Right House head office had thrown the liquidator and Right House staff out of the building.
"That makes life more difficult in getting information and writing to people," Fisk said. "They have turned the power off on us."
That meant Fisk and his team could not get access to files and company computers, even though they had offered to pay rent for the next month.
It also meant that a proposal to sell the insulation part of the business, employing 45 staff, could not be completed yesterday.
CHECK OUT FIRMS WANTING BIG DEPOSITS
If a company is asking for a sizeable deposit of thousands of dollars on something like a new kitchen or a heating system, check them out as much as you can, Consumer NZ says.
"If the terms look really hard and one-sided and you have doubts, then don't deal with them. Go somewhere else," Consumer NZ researcher Jessica Wilson said.
Anyone who pays a deposit becomes an unsecured creditor if the company fails. They stand at the end of a long list of other creditors and need to make a claim for their money.
Those at the top of the list include secured creditors, such as a bank, Inland Revenue, and staff wages or holiday pay.
Unsecured creditors are "at the bottom" and may not get back all the money they are owed, Wilson said.
Consumer NZ recommends that customers try to limit the deposit to about 10 per cent of the total.
"If you are asked for a high deposit, that would raise flags with us," she said, though it may be legitimate so the company can order gear for customers.
And if work or goods are not delivered as promised, that would raise a red flag and customers should start asking questions.
"If it is not meeting its obligations to do the work on time, you have grounds to ask for your deposit back," Wilson said.
Buyers should check out a company as much as they can, by asking about work they have done in the past, and talking to friends or family for recommendations. You can also check if they belong to a trade group and if that offers any protection, if things go wrong.
It is rare for New Zealand companies to put deposits in a separate protected account, but it is worth asking for that.
You can also ask for things like kitchen equipment to be delivered for storage at your house, rather than leave them at the company's warehouse.
"No harm in asking," Wilson said.
- The Dominion Post
