Failed debt collection firm owes customers thousands

Customers owed almost $200,000 from a failed debt collection agency will not see a cent because of the company’s ‘‘extremely poor’’ book keeping, a court has heard.

Taranaki firm Total Debt Solutions went into liquidation in December 2015, writes Mike Watson.

The company - which was owned by majority shareholder and sole director Tim LevchenkoScott, of Palmerston North, and Colin and Margaret Comber, of New Plymouth - owed customers $191,075 but held only $25,156 in a bank trust account as money received from debtors.

Liquidators Malcolm Hollis and Wendy Somerville applied to the High Court to retrieve payment of their fees from the account, which was operated as a trust account by TDS.

The liquidators, who were owed $44,000 in fees, said the booking was ‘‘extremely poor’’ and as a result they could not determine which customers were entitled to money from the trust account.

The court was told the only way to find out which customers were entitled to a share of the trust funds would be to do a time consuming ’’retrospective tracing’’ of bank statements - the cost of which would exceed the funds in the trust account.

High Court Associate Judge John Matthews said to do the reconciliation was ‘‘unrealistic’’.

‘‘Even if the reconciliation was undertaken the claimants would only receive less than 10 cents in the dollar. The liquidators would also have no prospect of receiving any sum on account of fees incurred to date.’’

The money in the trust account was only enough to cover half the liquidators’ fees, he said.

In his decision Judge Matthews ordered the remaining funds from the trust account to be used to pay expenses and fees of the liquidators in spite of any reconciliation being undertaken.