Tuesday, July 19, 2022

No Deposit, No Return

160 customers may lose their deposits after a Gluckstadt generator installation company asked a bankruptcy court to liquidate its business last week.   

Generator Technologies sells and installs generators for Generac and other manufacturers.  Although there are several other such dealers in Hinds and Rankin counties, Generator Technologies is the only Generac dealer in Madison County.  Customers who contact Generac are referred to these local dealers for sales and service. 

Unfortunately for Generator Technologies, there is a national shortage of generators.   The company's main supplier, Generac, simply can not meet the demand for natural gas generators. February 2022 Foxbusiness story.    

Despite the shortage, Generator Technologies continued to sell generators. Customers paid a 50% deposit. Several customers said the company said it would be at least 25 weeks before their generators were delivered.  However, the owner's wife said on social media in May the waiting period increased to 42 weeks.  

Frustrated customers started demanding refunds.  In response, Generator Technologies filed a Chapter 11, Subchapter 5* bankruptcy petition on April 29.  The petition states Generator Technologies has approximately 201 creditors. 150 creditors are individuals.  JJ estimates there are 160 customers among the creditors.  Earlier post.

Some customers attempted to cancel their sales through their credit card companies.  However, Generator Technologies  challenged those refunds by filing motions to stay those proceedings against the customers in bankruptcy court.*

The company threw in the towel as it stated its intention to liquidate the business in a motion to sell assets filed on July 12.  Bankruptcy Judge Jamie Wilson stated in an order approving the sale of a forklift yesterday: 

Movant has made the decision that liquidation of the equipment, and its business, is in its best interest and in the best interest of all creditors.  

The company also asked for permission to sell seven trucks.  Generator Technologies stated in an exhibit to an operation report filed with the court on July 8: 

We have not been able to purchase generators at retail and have no inventory.  We have purchased service kits but they have been on back order since 6/15.  We are unable to generate enough cash flow to pay all our expenses.   

The operating report  stated the company had less than $10,000 cash on hand.  Thus it appears quite a few customers will be hoping the company gets something, anything, on the liquidation of its assets.  

* The May 26 post reported one customer's experience:

Generator Technologies filed motions to stay and enforce sanctions against the customers who attempted to cancel the sales through their credit card companies.  One such motion was filed against Ellen Foster of Vicksburg.  

Ms. Foster ordered a generator in August 2021 and paid the $7,000 deposit.  March rolled around and the Vicksburg woman still had no generator. She tried to cancel her order but received no response from GT.   Fed up, the customer disputed the transaction with her credit card company in March.  The motion states: 

7.          The delay in receiving generators has caused a delay in Movant installing generators and in receiving payment for those generators, all of which resulted in severe cash flow issues with the Movant that precipitated this Chapter 11 case. There are numerous customers of the Movant who are in the same position as the Purchaser - that is, they are awaiting delivery and installation of their generator, just as is the Movant.

8.          With respect to the Purchaser, Movant understands that at some point the Purchaser ran out of patience with the delays in delivery (even though those delays are no fault of the Movant) and she initiated a protest or dispute with her credit card issuer, asserting that she was entitled to a refund of the partial purchase price payment she had made to the Movant, through her credit card, because of the failure of Movant to deliver the generator that had been contracted for by the parties. It is the Movant's  understanding  that this dispute process  was  initiated  prior to the filing of the Petition herein (although Movant cannot verify that) but Movant was contacted  by its credit card processor, post-petition, of the issuance of this dispute and that the processor intended to attempt to reverse the transaction and obtain the disputed funds from Movant's operating checking account....

12.       The loss of the $7,000 down payment comes at a critical juncture in this case, and the loss of those funds will not allow the Movant to purchase necessary parts and supplies to install and service the generators that it has or it is about to receive, which may cause lost profits and additional incidental and consequential  damages as a direct and proximate result of the Purchaser's actions herein.

13.        Moreover, if this situation is to occur with other purchasers, this case, which has so much promise, may suffer irreparable harm under the circumstances and lose its ability to reorganize, so precedent is an important issue here.

 The feisty Foster fired right back at the bankruptcy company with an objection: 

3.         Receiving no response from Debtor, on or before April 26, 2022, Foster disputed the charge through her credit card company and requested a refund from Visa.  See Exhibit C attached and incorporated herein by reference.  The dispute of the credit card charge was not initiated until after the Notice of Cancellation was sent March 21, 2022, and after multiple phone calls were made by Foster to Debtor from April 20, 2022, until April 25, 2022, from which no response was provided by Debtor.  Foster did nothing further with regard to this disputed transaction for request for a refund.  Subsequently, the credit card company did credit Foster's card for the disputed deposit.  All of Foster's actions having occurred pre-petition, Foster is not in violation of the automatic stay. 

Buyer beware. 


Anonymous said...

Do the customers get credit for their down payments as to generac?

Anonymous said...

Where did all the deposit $ go?

Anonymous said...

I purchased a 22Kw whole house generator (NOT Generac) last fall. I paid less for the generator, transfers switch and installation than these folks paid for just a deposit on theirs. Something doesn't seem right, such as more than just a generator shortage.

Anonymous said...

When I purchased my 16 kw Generac natural gas generator I had to go to Home Depot to pay for it. Installed by an Electrician with MS Energy Services in Terry. Been running fine during exercise and had a 10 hr run the other night when our neighborhood lost power during one of our thunderstorms.

Anonymous said...

I do feel bad for the business that they couldn't get generators from the supplier. That is something they can't control.

I don't think the business was run efficiently.

I also think that it's pretty shady that refunds can't be issued. Deposits should be kept separate in an escrow account. It shouldn't be mixed with normal operating cash. This just isn't ethical in my opinion.

Anonymous said...

And yet the TV commercials for these things continue running endlessly.......

Anonymous said...

July 19, 2022 at 10:41 AM
True, but many contracts are paid up front and the ads must run or the contract is in default leading to a lawsuit.

Anonymous said...

Surely Generac would cover the customers losses when a shady dealer goes belly up like this. Can’t imagine they would screw over their customers and give them nothing when they already have their order in process.

Anonymous said...

It would be interesting to know if Generator Technologies had to pay a portion, if not all, of the deposit to Generac when they ordered the generator. If so, they might have a claim against Generac. There's no reason a company should require such a large deposit. If they don't kick any of it up to Generac, they're just using your money as operating capital for their business.

Anonymous said...

That's it, I'm moving to Flora!

Anonymous said...

I now need a Generac dealer for ongoing maintenance. Any recommendations for a local business in the tri-county area? Thanks.

Anonymous said...

@11:31 that is a valid point. But if customer #12 wants a refund, you could simply refund him and everyone else moves up the list. And then the deposit from the next customer replaces it. Because you would be getting a full deposit without having to pay Generac anything.

For example if you have taken 100 deposits and paid 100 payments for 100 generators to Generac, then one person wants a refund, you now have 99 deposits but you've paid 100 payments for 100 generators to Generac. When the next customer walks in, you take a deposit (that puts you back at 100 deposits. However, you don't have to order or pay anything to Generac.

Anonymous said...

10:04am please provide the name of the generator comply that you used. Sounds like you got a fair deal.

Anonymous said...

Order the service and repair manual and do it yourself. There’s really not much to it unless the generator quits making power or transfer switch quits functioning.

Anonymous said...

For the guy that has a Generac generator and no one to service it. There are several excellent Generac forums full of retired Generac service tech, electricians and installers. The gladly share their knowledge, F R E E, on any issue you may be having. All you have to join their sites and post your problem. Just be sure you include the model and serial numbers of your unit. I'm posting two of the site address is KF allows it.



These two forums helped me immensely and solved the problem I was having on my unit.

Kingfish said...

When I googled Generac, several dealers/installers popped up in the Jackson area. I remember one in Terry and one in Pearl. There were four or five if I remember correctly.

Anonymous said...

Generac units are as good as most others. The main issue with Generac is they WILL NOT help the end user/owner of their generators. They only help Generac certified techs.

Main difference between Generac and most others is, So Im Told, Generac units have the all the smarts in the of the controller in the generator itself and a dumb transfer switch. Most other units its visa-versa.

Anonymous said...

@11;46, 10:12 here. MS Energy Services in Terry. Been reliable for my service.

Anonymous said...

The problem is not Generac, but with Generator Technologies. Generac is a good reliable standby generator. Fixed or portable.

Anonymous said...

Depending on the price of natural gas, it shouldn't cost more than $5 or $10 per month to run the unit in exercise mode. During a power outage, under 50% load expect to pay around $20-$40/day for gas usage. A lot cheaper than a hotel room or spoiled food!

Anonymous said...

@5:02 - multiply that per-day usage figure by 5 and you'll be close to the correct amount. Ask me how I know.

Anonymous said...

I’m going to throw my hat in the ring here. I purchased mine from a dealer in Greenwood. I was recommended by a family member to use them after I contacted Taylor In Clinton who is a dealer but after 4 attempts I could not get them to show up. I used Taylor Power Systems for repair and maintenance on my portable 85kw unit and they did a great job. Maybe they were snowed under to assist the residential side. Anyway, I have a 24kw Generac and it has had several issues with the controller but that has been taken care of. I feel confident with the dealer I used from Greenwood and I live in Raymond. I am very fortunate because I usually pick a bad apple but, this time I didn’t. The Company is Dent Turner Air in Greenwood. To add, I hate all of this happening for all parties. My heart goes out to all of you.

Anonymous said...

We've been content with the Titan gas generator we bought a week after Katrina in 2005. Yeah, we have to haul it out of the garage and connect a bunch of extension cords to it to power our refrigerators and freezers, a television, coffee pot and lights, etc. but it's not a big deal. We also have a couple of A/C window units we can install in windows if the power fails during summer. A woodburning fireplace with an insert provides heat during winter. Our house is all-electric, built in 1960, and I'm not interested in having a big propane gas tank in our backyard to run a Generac during a power outage. It's not that big a deal when the power fails here.

I feel sorry for those customers who got screwed by what appears unscrupulous business practices.

Anonymous said...

If a business asks for a large cash deposit that is a huge red flag.

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