The Company was formed to import and distribute hoverboards.
A hoverboard is a type of portable rechargeable battery powered scooter, typically consisting of two wheels joined by a platform on which the rider stands, controlling the device with their feet.
The concept, which originated in China, became widely popular in the USA and having seen an increasing demand for the device in UK and Europe, the Company was formed as a vehicle through which to trade.
The Company traded from premises in Burnley and were leased from an associated Company on an informal rent free basis.
Initial finance was provided by a short term loan of £150,000 from an external investor and the introduction of personal funds from the director. These funds were utilised for the initial set up costs and to pay for stock as the Chinese supplier required full payment in advance of delivery.
Although the products were supplied under warranty, on occasions when boards were damaged the Company had to fund the repair costs themselves and often had to use parts from their new stock as the manufacturer failed to supply replacement parts or compensate the Company for these costs. None of these issues related to electrical faults.
More recently, the industry as a whole has come under increasing scrutiny following incidents when the batteries and electrical systems caught fire or malfunctioned in a dangerous manner.
Although none of the units supplied by the Company had reported issues of this nature, the Company were contacted by Trading Standards who were responsible for ensuring imported consumer goods were fully compliant with product safety legislation.
Checks on sample products revealed areas of non-compliance and as a result, the 10,019 units which the Company had ordered and paid for became subject to a Suspension Notice pending further testing.
The Company were advised by Trading Standards that their Test Report deemed the boards to be unsafe and the Company was served with a Withdrawal Notice requiring the destruction of the 10,019 remaining units.
Confident that all issues could be resolved, the director, in conjunction with the Chinese manufacturer, proposed a series of changes and improvements to the product and its packaging to address the safety issues.
However, despite having agreed an extension to the Withdrawal Notice, a final deadline was imposed for the units to be destroyed .Regrettably, by that stage the Company did not have sufficient reserves to meet the costs of disposing of the stock which were circa £75,000.
With no means to pay the costs, the directors sought the advice of insolvency specialists AABRS and the company was placed into Creditors Voluntary Liquidation.