E-Store's hopes of surviving its administration period and trading its way out of debt appear to have been in vain following revelations by the company's controllers and the NSW Department of Fair Trading.

Administrator, Star Dean Willcocks' Ian Purchas, yesterday said the company had not been meeting its debt repayment obligations under a deed of company arrangement established when the company went into administration in October 2001, while NSW Fair Trading on Tuesday revealed that the company had been under its scrutiny since January this year.

Purchas said E-store's creditors were yesterday compelled to adjourn a meeting held with the company's management to consider its future.

"We held a meeting and certain things were discussed. As a result of those discussions the meeting was adjourned and that adjourned-meeting will [be reconvened] in the next couple of weeks to consider what might be put to [the creditors] about the company's future," said Purchas.

E-Store has been operating under a deed of company arrangement since the company voluntarily entered administration. Under the arrangement, the business was required to pay off the company's substantial pool of debts in monthly allotments of nearly AU$450,000 over two years.

Adding to the company's woes, the NSW Department of Fair Trading told ZDNet Australia that it had put procedures in place to direct complaints it has received concerning a backlog of unfulfilled customer orders placed with the company to a senior E-Store executive.

A spokesperson for NSW Fair Trading said E-Store had told the consumer watchdog the backlog was generated by unexpectedly high sales over the Christmas period.

"We've been advised that this is a short-term supply problem and we're working through any complaints that we receive with E-Store to resolve them," he said.

However, while a pall hangs over the company's future, it appears that there is a growing queue of E-Store customers awaiting refunds for the delivery of goods they purchased from the online shop last year.

ZDNet Australia has received a steady stream of complaints from angry E-Store customers since mid-December last year, some concerning orders placed with the e-vendor as late as February 2003.

One customer who contacted ZDNet Australia   placed two orders with the company around September last year, but secured a refund after waiting more than seven weeks for his order to be fulfilled. He claims E-Store staff told him it was having trouble with the accuracy of the stock levels reported on its online store.

"E-Store have great prices... What they don't tell you is that the stock level on their system provided is not accurate," he said.

That claim is supported by the experience of another exasperated customer, David Cooper, yet to receive an AU$559 Creative Labs Extigy sound card he purchased from E-Store by credit card in December. Cooper has written an angry letter to Star Dean-Willcocks.

Cooper wrote that between early January and late February, E-Store repeatedly told him the sound card was unavailable from suppliers.

Determined, Cooper contacted representatives of Creative's suppliers in Sydney to ask why they were not able to supply E-Store with his sound card. On 3 March, Creative told Cooper that E-Store were yet to place an order for the card. The next day Ione Coe, a representative of Creative, told Cooper that E-Store was chasing up his order.

However Cooper received some discouraging news a day later.

"On the 5th of March, Ione rang me to advise that E-Store does not have a credit facility with them and any Creative products supplied to E-Store are on a C.O.D. basis," wrote Cooper.

Like many other customers Cooper can only contact E-Store via email, the company having recently placed a message on its answering service informing customers that this was the only method of communication it would accept. NSW Fair Trading said yesterday there were no laws requiring E-store to provide a contact number but suggested that E-Store may be in breach of several codes established in the retail sector.

Cooper is yet to hear from Star Dean-Willcocks.

And NSW Fair Trading appears to have no plans to issue a consumer warning regarding E-store despite the strikingly eerie resemblance between the current crop of customer complaints and those reported throughout the company's chequered service history.

In June 2002 E-store customers reported lengthy delays in delivery of goods. At the time E-store admitted to a "backlog" of unfulfilled orders which it claimed were due to a 36-hour loss of telecommunications services while the company relocated its premises.

While the site was down for little over a day, customers reported delivery delays in excess of a month. Also, at the time, many customers reported discrepancies between stock-levels listed on the company's online store and verbal advice provided by E-Store staff.

Similar backlogs were reported by customers immediately before E-Store was delivered into the care of Star Dean-Willcocks on October 3rd 2001.

"With the procedures in place," said a spokesperson for the NSW consumer watchdog, "[Fair Trading] has no outstanding issues with E-Store".

The 2001 customer fulfilment backlogs were the first cracks to appear in E-Store's business model, following rumblings of dissatisfaction coming from customers and suppliers.

A former employee of E-Store later revealed that the company had encountered supply problems when its relationship with distributor Tech Pacific collapsed. The former employee said E-Store was forced to find a variety of new suppliers whilst operating with a limited line of credit, making it difficult to guarantee fulfilment of customer orders.

"The site would say we had 20 in stock but in reality we didn't know how many units our suppliers had in stock, so fulfilling orders became a real problem," said the former employee.

E-store's then-owner, Steven Spilly, placed the company into voluntary administration, leaving a number of suppliers and customers out of pocket.

"It was always difficult to get paid, they were always late with payment," said Fiona Dicker, managing director of Dicker Data. "It wasn't a recent thing, they had always been slow".

Around the same time, one vendor alleged that E-store owed a group of four vendors a combined total of more than AU$1.1 million, fueling speculation that the Australian Securities and Investment Commission (ASIC) would investigate the company.

In November 2001 the company found a US buyer. Spilly divested his interest in E-Store to Callnet, part-owned by the company's current managing director, Greg Farley. Farley was allowed to continue operating the company under the gaze of creditors and administrators.

Farley tried to distance himself from the company's past after taking its helm.

"I'm not into blame games or anything," Farley told ZDNet Australia   in June 2002. "We are moving this business along in the best way we know".

However Farley's own past brought controversy to the administrator's decision to allow E-store to trade its way out of debt. In 1998, ASIC had placed a ban on Farley stopping him from trading for four years.

Speaking to ZDNet Australia in June last year he described the ban as a "battle".

At the time ZDNet Australia asked Farley if that battle was over. Farley said: "I'm not exactly sure...it should be over, but to be frank I'm not sure".

The situation could substantially undermine consumer confidence in online retailing, which is already struggling to establish credibility in the mainstream markets.

"I was confident that being a retailer 'sponsored' by Ninemsn -- especially as there is a 'safe and secure' logo featured on the main page of Ninemsn Shopping -- that I would be dealing with a reputable, reliable and efficient online shopping site. This does not seem to be the case," lamented Cooper.

NSW Fair Trading said it was eager to hear from consumers who have concerns about E-Store service. The regulator can be contacted on 13 32 20.

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