Diamond Exchange closes owing $2.5 million

5.7 k views | Posted November 16, 2010 | By Sonia Nair

In what can only be described as a tragedy for customers, online retailer Diamond Exchange has closed its doors, unable to pay the $1 million it owes its customers.

Diamond Exchange’s future was dealt a final blow when the Victorian Supreme Court terminated its administration process and sent it into liquidation.

Diamond Exchange owes up to $2.5 million in debts, of which $1 million is owed to customers.

Con Kokkinos and Matthew Jess of Worrells were appointed provisional liquidators on November 12. As there were no nominated liquidators, Kokkinos and Jess were appointed official liquidators on November 15.

Kokkinos told Jeweller, “We worked with the directors of Diamond Exchange and had been negotiating with a number of parties to push forward a proposal but nothing concrete came out of it.”

Kokkinos and Jess were unable to prove that the case would be resolved in a beneficial manner to creditors. The court then, with consent, decided to put Diamond Exchange’s administration to an end.

Kokkinos said Diamond Exchange directors have asked him to endeavour to secure some purchase of assets so that they would then be “in a much better return to credit than what otherwise would be.”

“It’s a bit early to say what went wrong with Diamond Exchange but creditors will be updated in due course.”

Kokkinos said he and Jess would carry out an investigation into why Diamond Exchange went under and lodge a report with ASIC, now that they know what direction the company is headed.

However, he warned customers against being too optimistic.

“From what we know at the moment, majority of the claimants [pre-paying customers] will not get their money or diamonds back at this stage.”

Jeweller has been inundated with calls and emails since September 17 regarding Diamond Exchange with one woman saying that Diamond Exchange had deducted $14,000 from her credit card on the very day the company was placed in administration.

She claims that she had authorised a $3,000 deposit two weeks earlier but had not authorised the additional $14,000 payment. If true, this could be a serious matter for government authorities to investigate.

Kokkinos said he would consult his solicitors to decide what needs to be done if he finds himself holding any stock that relates to specific, easily identified purchases.

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