Diamond Exchange wants to continue trading

2.8 k views | Posted November 09, 2010 | By Sonia Nair

Diamond Exchange’s fate is now to be decided at a court hearing on November 12, following another court adjournment on November 5.

Diamond Exchange appeared in the Victorian Supreme Court last Friday to defend itself against the wind-up application brought against it by creditor Morgan Trusscolt Capital (MTC).

The online diamond retailer is now under the control of Worrells’ Melbourne office after the liquidation and bankruptcy specialist was appointed administrator for Diamond Exchange on October 27.

According to Ron Lane of Garland Hawthorn Brahe Lawyers, the solicitor of MTC, the hearing was adjourned for seven days to allow Worrells to put together a proposal on debt settlement and send it out to all creditors.

Diamond Exchange’s fate hinges on whether its directors can draw up a proposal in time.

“The company will most likely be wound up if there is no proposal presented on Friday,” Lane said.

In a related incident, JAA chief executive Ian Hadassin hit out at criticism against the organisation for not terminating Diamond Exchange’s membership sooner.

Hadassin said that the JAA first received complaints from four consumers about Diamond Exchange in early August and responded swiftly by sending out a letter of demand.

In this letter, the JAA ordered Diamond Exchange to settle its disputes, amend the terms and conditions of sale on its website and appoint a compliance officer. However, the industry body has no official policing power.

Diamond Exchange complied with the JAA’s wishes by reimbursing the four consumers who complained. As more complaints surfaced however, the JAA referred them on to ASIC and warned consumers of Diamond Exchange on its website.

In accordance with its constitution the JAA gave Diamond Exchange 21 days’ notice of termination and the retailer’s membership was cancelled on November 1.

Following the debacle, Hadassin said the JAA is tightening its membership laws.

“We are now reviewing our database of members to determine if there are other JAA members operating in a similar fashion to Diamond Exchange,” he said.

“We are also in the process of drafting a much stricter Code of Practice for such companies that will address the problem of selling from a presumed overseas stock base.”

Hadassin said the JAA could not do anything about the Brisbane branch of Diamond Exchange and Diamond Bidz, a company set up by Diamond Exchange directors, as they both have separate ABNs to Diamond Exchange and are not members of the JAA.

Hadassin said he has made a precautionary report to ASIC in regards to Diamond Bidz.

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