Graham Jones, chief executive of Lawdata, which assists dealer groups to set up warranty divisions, says: “The news about Warranty Holdings has rocked confidence. Dealers are saying that if a business of this size can fail, then they want direct control. We have already seen signs of more dealers wanting to do this. They take a lot of time and trouble selecting stock and I expect many to see an opportunity to make more money on warranties.”
Three partners at accountant Grant Thornton were appointed joint administrators of Oriel Investment Corporation (which includes WH) at the request of the directors. This happened shortly after the sudden departure of chief executive Peter Head from the company's Waltham Cross offices on March 12.
The directors asked Hertfordshire police to investigate “serious business irregularities” uncovered during an internal audit of the company accounts. Last autumn, group managing director David Shapiro left WH, an £85m Ford Motor Company subsidiary. Detectives are making an initial examination of documents taken from WH's headquarters. Depending on what is discovered, a much bigger investigation could follow.
Meanwhile, Grant Thornton is running the business and talking to potential buyers. The administrators, who hope to sell Warranty Holdings as a going concern, immediately made about a quarter of the 400 employees redundant – a further 56 people, in the sales and corporate department, lost their jobs a week later.
NIG (National insurance and Guarantee Corporation) and AXA Insurance UK, which support the bulk of Warranty Holdings' business, say “all valid claims” will be met but the company is accepting no new business. A dealer who called WH was told the company's bank accounts were frozen which has caused alarm about payments despite the assurances.
The RMI is making its own enquiries. Chief executive Matthew Carrington says: “We are deeply concerned and are trying to help members to find alternative warranty cover arrangements.”
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