TVSN fires off legal letters as war with suppliers escalates

TVSN is resisting pressure to appoint an external administrator and has warned against abusive messages to staff amid a social media war, which erupted as suppliers became infuriated by the home shopping network’s unresponsiveness.

Dozens of suppliers have come forward claiming TVSN is selling stock that hasn’t been paid for, and an insolvency expert has said they are unlikely to have their debts recouped.

Earlier this month, this masthead reported TVSN was planning a fire sale to clear out $30 million in stock, which resulted in products – from beauty supplements and powders to diamonds – being offered at heavily discounted prices.

“At this stage, we do not have plans to enter into any administration unless we cannot meet creditor commitments and cannot find a buyer,” TVSN director Bernie Brookes, also the chairman of TVSN’s owner, Direct Group, said in an email.

On Wednesday, London-based hair products supplier Guy Parsons was served with a letter by TVSN’s legal representative accusing him of intimidating and threatening staff and circulating “purposefully misleading statements”, and demanded he retract social media posts and publish an apology for “misinformation”.

Parsons was due to appear on a broadcast segment advertising his products before his appearance was abruptly pulled, and he was barred from entering TVSN’s headquarters last week when he went to retrieve his belongings. Parsons has worked with TVSN for four years and claims he is owed $140,000.

In an Instagram video uploaded on October 10, Parsons published what appeared to be the email addresses of TVSN’s chief executive, chief financial officer and two other executives with a caption urging people to “tell them what you think”.

A letter sent to Parsons by commercial disputes law firm Kardos Scanlan on Wednesday said: “Your threatening and intimidating behaviour has caused our client’s employees substantial fear and distress. As a result of your conduct, our client’s employees are afraid to attend work as they do not feel safe doing so.”

TVSN also uploaded an Instagram post imploring “everyone to please treat our people with kindness and respect”.

The post said: “Our presenters, guests and team members continue to come to work every day to look after you. They are not responsible for decisions about the future of the business, and neither they nor their families should be the target of anyone’s frustration or abuse.”

Many TVSN suppliers have made social media posts lamenting the network’s closure or criticising its lack of communication, and have urged shoppers to buy directly from their sites. Multiple suppliers who spoke to this masthead said they were yet to receive a response from TVSN about outstanding payments.

Leather bag brand Anuschka, a US-based supplier, said TVSN had picked up goods from a workshop in India but left the stock in Singapore. The company said it was still owed money from an order delivered “many months ago”.

“As a foreign supplier, we are struggling to get information and follow up on our claims,” said Anuschka designer and chief executive Bhaskar Basu.

Specialist lender Challenger Investment Management holds a $68.8 million debt position in relation to Direct Group. If it exercises its right to appoint a receiver, Challenger will be first in line to recover any funds raised by TVSN’s $30 million clearance sale, after employee entitlements are paid.

Restructuring and insolvency expert Andrew McCabe said: “The receiver can work for the secured creditor to collect all the sale proceeds to reduce the secured creditor debt, leaving nothing left for the suppliers who become unsecured creditors and are unlikely to receive any money unless there’s a surplus after the secured creditor is paid out in full.”

If Direct Group, as the company that owns TVSN, goes into administration, liquidation or receivership, company directors can be referred to corporate watchdog ASIC for insolvent trading. A leaked investor pitch deck, compiled by Brookes’ son, Tim Brookes, indicated that the sales process was being run in a “stressed capital structure” and indicated that advice on safe harbour protections had been sought.

Safe harbour acts as a temporary legal shield to protect company directors from personal liability for insolvent trading, as long as directors seek advice from a restructuring expert and actively develop and pursue a course of action.

“The business has taken advice at all times to meet our obligations for solvency,” Bernie Brookes said in a statement.

A spokesperson for Challenger said the company does not comment on individual investments.

Sydney cookware business So Simple Solutions served TVSN with a statutory demand on October 2. If the outstanding debt is not paid by October 23, the business has indicated its intention to pursue a winding-up order to liquidate TVSN.

TVSN was founded more than 30 years ago and advertises more than 6000 products through unscripted demonstrations live every day from 8.30am to 9.30pm. These demonstrations are often co-hosted by the business owner of the advertised product, but external appearances were cancelled shortly before the closing sale began.

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