The prospect of the bulk of would-be customers of stricken caravan manufacturer, Zone RV, getting any of the money they paid in advance back appears to be diminishing.
The first creditors meeting since the Sunshine Coast based company went into administration has revealed it owes about $40 million to creditors.
The ABC reports that Rahul Goyal from administrators, Cor Cordis, told about 250 individual creditors that he was investigating how Zone RV ended up in this position.
“It’s not unusual for a business of this size to owe this amount of money,” he said.
The ABC reports that Zone RV has an annual turnover of about $70 million, and Mr Goyal said things weren’t looking great for the majority of unsecured creditors, including suppliers and customers.
A buyer has been found for luxury caravan manufacturer, Zone RV. PIC: Dozza
“If the company were to be liquidated, the chances of getting anything are quite remote,” he said.
There are about a dozen caravans parked in the yard of Zone RV’s Coolum factory, with many displaying a “complete” sign.
Mr Goyal however said the small group of customers who had paid their final instalments might receive their vans.
“I want them all out by the end of next week, the ones that are fully completed,” he said.
However, the picture is bleaker for the majority of remaining customers.
“If you’ve made first and second payments, your caravan is unlikely to be in a production line anywhere,” the ABC reports Mr Goyal as saying. “If you’ve made a third payment, it may or may not be in production.”
The closure of the premium caravan manufacturer left about 240 staff unemployed and 180 customers in limbo.
The ABC reports that customers are short about $18 million, suppliers are owed up to $20 million, and employee entitlements are $4 million, while taxpayers are on the hook for $1.4 million from unpaid taxes.
Zone RV specialises in luxury off-road caravans and its vehicles command a price tag of up to $250,000.
It is being reported that the company was actively taking orders in the days leading up to the appointment of administrators on December 1, and customers were still being urged to ‘progress payments’ until the last moment.
The reaction from many grey nomads was, predictably, one of outrage.
One poster on the Grey Nomads Facebook page said she had paid a huge payment to Zone RV back in November.
“My van isn’t even started yet and 45% / near $95,000 is gone,” she said. “I have been severely impacted and yes, there needs to be regulation … I work in construction where we have a tonne of regulation to protect consumers, but nothing has protected us.”
Other commenters agreed, and said there had to be a change to the way payments are made.
“I’m not sure why there’s an expectation to pay upfront,” said one. “Should be a small security deposit like buying a car, then full payment at pickup.”
It was a sentiment many agreed with.
“All deposits should go into a trust fund that’s protected by the law and can’t be released until the van is delivered,” said another poster.
Sadly, Zone RV is not the first Australian caravan firm to go to the wall in recent years.
# Do you think more has to be done to protect RV-buying customers form situations like this? Comment below.
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We need to regulate the caravan indusry full stop.
All deposots should be held in a trust account not controled by the seller and only a token deposit of a small of 5% be paid that is fully refundable if van constuction not yet started within a certian time frame and if not competed by a certian date buyer has the right to cancel order and have a full refund.
warranty claims need to also be controled by gov legislation and covered by independant insurance.
Derek .Spot on with reply.
Lets see if the Goverment does anything ,Watched a pig fly by the window
I agree with you Derek completely.
Great idea.
This really saddening for those owed money and those who paid in good faith only to have that faith burnt. Yes fund should be placed in trust rebased upon completion.
I would be interested to see what the Director’s salaries and entitlements were
So would lot of people i think
Yes – there appears to be no real regulation of the caravan industry – there needs to be a body or association that sits on top of the manufacturers with real power (to regulate or un-regulate players) & a stamp of approval for each van independent of the builder – there are too many players in the world of caravans – payment instalments should be standardized & kept in trust for the purchaser / manufacturer – than paying an industry agreed % deposit direct to the manufacturer.
Commercial lenders and suppliers are aware of the risks of extending credit to a business. In some cases they build this risk into their business model. It is unfair for private buyers to be exposed to a risk like this.
The government should legislate to either outlaw progress payments or ensure they are in a trust fund and are refundable.
There is a lot to be said for buying second hand Caravans. We will never buy another new one. The long build delays a the poor quality together with the huge cost on the new vans, it’s not worth the effort.
Have heard the same story from people they will NEVER buy new unit
I feel sorry for people who will end up losing money to this situation. Why, why, why, would you pay so much up front with nothing to protect you, this is like a scam, pay me and I will build you a caravan! where are the warning bells? The risk is all on the buyer, I bet this has happened before and will happen again.
This just shows how unscrupulous this company was, taking orders and payments right up to the end and this company was considered to be a premium caravan manufacturer, trust nobody with your money.
If companies need payments upfront or progress payments they are probably one step away from going under.
Look for different manufacturers that only need a small deposit and don’t need payments upfront, you will probably pay more in the end, but, you will get your caravan.
Agree. Van first then pay.
Great reply Recon ARTHUR DALEY .MINDER would love this system
The caravan industry is a joke. We get told to pay BIG $$$ and stick with large reputable aussie companies. Zone showed this publicly. Now they go down. What is the consumer to do? The rules need to change. Quickly.
dead right
Who tells you to pay big $s? The are plenty of far cheaper vans capable of going where any Zone van will go. I guess many want to be seen with what was called one of the best. How about the workers and suppliers being hit with this before Christmas.
Why on earth are people making a decision to fund the cash flow of the business in the first place? Payments of more than a nominal deposit are a sure sign of cash flow problems.
Such issues are not confined to the caravan industry, plenty of businesses try this sort of thing on and most relent if they want the sale. All aspects of a sale contract are negotiable – including Zone RVs contract.
The government can’t be expected legislate for the lowest common denominator.
I was offered a ‘pay now collect later’ deal by a caravan supplier – NO WAY – so I paid cash for a second hand one. No risk of supplier insolvency and immediate delivery. Sorry for these losers but this is a clear case of caveat emptor.
Hi Rod did the right thing there
When we purchased our new Australian made (biggest in Oz) van in 2004 we paid a token deposit and the balance on delivery 8 months later. Since then we have purchased another new van from the same mfr. with good results. This is part of the answer, deal with reputable manufacturing sources in Oz, hold payment until delivery and hope the quality control is adequate.
Well said.
A deposit of no more than 5% & the balance on DELIVERY should be standard contract conditions when purchasing any RV.
We bought a Crusader for $113,000 only had to make a deposit of $5000 and then pay the balance on delivery in my opinion this should be the standard to protect buyers .We really feel for everyone affected. Doug and Kate.
Why should the buyer pay upfront for your build, if manufacturer cannot afford to build it get out of the business