LeftBrain went into voluntary liquidation on April 16, with Paul Clark and Kenneth Brown of BDO Tauranga appointed to handle the process. It owns iQ Toys, which was established in Mt Maunganui during 1996 by Shane and Suzette Loomb.
The iQ Toys website says that in 2011, the pair formed LeftBrain Group Limited, which owns iQ and their other ecommerce stores: Baby Universe, Gumboot, I Want That, Beauty 360 and Pet Spot. It also owns and operates software which provides an online retail store for third party retailers.
The insolvency report on the Companies Office says LeftBrain was incorporated in 1990.
Clark posted an update about the liquidation process to iQ’s Facebook page on April 24. He thanked customers for their patience, saying the liquidators were working through the stock in LeftBrain’s warehouse to confirm the status of each order placed, including layby stock.
“We ask for your continued patience as this is a lengthy process, we are dealing with hundreds of orders.”
A “significant number” of customers enquired about laybys and incomplete orders. In the liquidators’ report he released later in April, Clark says LeftBrain’s deficit from unfulfilled customers orders came to around $48,500 – around 800 were left hanging. Clark says this figure also includes trade suppliers.
Regarding the cause of the liquidation, Clark’s report says LeftBrain began suffering cashflow difficulties about a year ago. Contributing factors included New Zealand’s high exchange rate with the Australian dollar, “intense competition” and tightening margins with suppliers.
An Australian venture which failed three years ago ate up more of LeftBrain’s working capital.
During 2014, LeftBrain tried to strengthen its position by raising capital and restructuring to lower its cost base. It was looking healthier after a good Christmas, but an unusually slow January and February sent it back into trouble.
Overheads were reduced in response to the difficulties, and LeftBrain struggled to secure stock from suppliers.
The report says negotiations were occurring with an interested party for the sale of the business prior to the decision to liquidate LeftBrain, but when the talks were not concluded, the shareholders decided to appoint liquidators.
LeftBrain’s total deficit was undisclosed, but at the time of liquidation it owed around $284,000 to trade creditors, $11,158 to staff for wages and holiday pay, and $23,000 to the IRD.
The biggest debt disclosed in the liquidators’ report was to ASB Bank, which was owed $235,659.
Mighty Ape took over LeftBrain this month. A pop-up notice on iQ Toys’ website explains the new owner’s intentions towards the brand.
On iQ Toys’ Facebook page last week, Mighty Ape discussed its long-term plans, saying it was “early days” but it loved the iQ Toys and Baby Universe brands. Mighty Ape marketing, alliances and development manager Dylan Bland said this morning that last week was the company's first full week of having control over LeftBrain's websites, and it was already more than 80 percent of the way through shipping outstanding customer orders and/or issuing Mighty Ape vouchers to customers caught up in the liquidation process.
"We've been working hard to achieve a happy outcome for each and every customers - and we're delighted to report that the feedback has been overwhelmingly positive," he says.
This second week will be all about trying to get the websites back up and running so they can accept new orders, Bland says. He cited external factors outside Mighty Ape's control that may slow us down, but said it aimed to get them back up at the end of this week or early in next week.