Charity has a welcome for all
Instead of three new printers and ink, cover for its initial leasing payments plus a £10,000 donation and a free cancellation opt-out after 12 months, TMK got two used machines, worth at most £6,000, and is tied in to huge repayments for five years. So far it has repaid £8,300. Funding for the deal was provided by Grenke Leasing Ltd, part of German finance giant Grenke AG, which insists its role means it took no part in the terms of the deal PCS organised.
Although PCS has a registered address in Cambridge and is listed on Companies House as actively trading, Grenke has turned its fire power on the charity in a bid to retrieve the hefty sum that it says represents its outlay and profit.
But the grotesque tangle embroiling TMK is not unique.
Rather it is symptomatic of a flawed industry where injustice runs rampant exploiting small business customers thanks to the way agreements and liabilities can be structured and managed, says leasing expert Chas Jordan of Fair Contract Associates.
Mr Jordan is now advising TMK as it fights for survival and says: “There are many charities, schools and even councils out there trapped in very poor value deals for equipment such as printers.
“Unfortunately staff are not always wise to the pitfalls until it is too late.”
PCS contacted TMK last year, suggesting a deal laced with incentives that had helped other small organisations get better equipment.
After discussions the charity agreed.
TMK claims it was led to believe the deal contained a goodwill gesture from the printer manufacturer, something that later proved to be untrue.
The Missing Kind’s services are highly valued
Regarding the contracts he signed, Tom Gaskin for TMK said he agreed to the favourable one which confirmed PCS’s offer. He was assured it superseded any other.
Mr Gaskin questions a second contract with Grenke, completed he felt in a high-pressure sales situation with PCS, and he disputes the authenticity of his signature on it.
Grenke’s writ was served June when the charity was temporarily closed and struggling because of lockdown. But why only go after TMK?
“It’s standard for lenders to have indemnity clauses in their contracts with the introducers,” explains Mr Jordan. “We proposed the cost is split fairly among all three parties.”
Both Crusader and TMK have asked Grenke Leasing Ltd for any indemnity it holds, to date no document has been forthcoming.
Crusader has also tried to contact PCS, so far without success.
“Grenke is purely a provider of funding to finance an agreement between hirer and supplier,” the company told Crusader.
“Grenke takes no part in the negotiations and has no knowledge of them. It relies on the hirer [to perform] its own due diligence.
The Missing Kind’s services are highly valued
“It is inaccurate to suggest that Plan Corporate Services was the agent of Grenke or that the lease was sold by Plan Corporate Services on behalf of Grenke.
“Grenke was not present during any discussions between The Missing Kind and Plan Corporate Services and does not know what was said.
“The court proceedings seek payment of all the payments due under the lease, which effectively consists of the price Grenke paid Plan Corporate Services for the equipment and Grenke’s profit.
It would be unfair on Grenke to expect it to suffer a loss as a consequence of negotiations to which it was not a party.
“Grenke’s solicitors repeatedly invited proposals for settlement but none were made, and ultimately there was no option but to commence proceedings. Grenke views court proceedings as a last resort. We are willing to engage in constructive and commercial negotiations leading to settlement proposals.”
But Jordan says the charity has already reached out to Grenke in search of one.
“We have yet to receive any response to an initial settlement proposal from August 4, a response to copy court papers on August 21 or to our letter regarding a mediation meeting on September 10, all of which have been ignored,” he responds.
“I am at a loss to understand how one can communicate with Grenke Leasing Ltd. They could so easily pursue the people who caused the problem.”
Thousands benefit every year from TMK’s support.
But the dispute has already had a devastating impact on the charity’s operations forcing it to cut back.
“It has taken a lot of time and resources preparing our defence, time we normally would have spent on helping others,” says Gaskin.
The charity has adapted its business plan and is trying to generate funds from other sources in a bid to safeguard its future.
“The threat is jeopardising all our efforts,” adds Gaskin. “If Grenke is successful we may have to close.”
For more about supporting the charity during this difficult time, click here.