Essential Caravans buys Zone RV, but customers left short-changed

A deal to salvage collapsed Queensland luxury caravan manufacturer Zone RV will leave more than 100 customers about $10 million out of pocket.

The company went into administration in December owing $42 million and was put into liquidation in January.

Melbourne-based Essential Caravans has purchased Zone RV’s assets from the liquidator and luxury vans will continue to be built at the company’s Sunshine Coast factory.

But existing customers who had collectively paid millions of dollars in progress payments have been frozen out of the deal.

Some people had paid more than $160,000 towards caravans that had not been built when Zone RV collapsed. 

Zone RV’s new owner Jamie Johnson says he will scrap the progressive payment system. (ABC News: Kyle Harley)

Essential Caravans director Jamie Johnson said while he felt “sick in the stomach” for customers who lost money, he could not carry their debt.

“It just wasn’t possible to keep the business alive and take on the obligations for the customers,” he said.

“Some of them we can accommodate fully, but some of them have obviously paid a substantial amount and the business just can’t sustain being able to absorb that going forward.”

Mr Johnson said he would contact affected customers “the minute I’m allowed to under the agreement”.

The ABC understands the deal was worth about $8 million.

Olive branch to customers

Mr Johnson said he would offer affected customers new caravans at cost price.

It means customers who only paid a 5 per cent deposit have the opportunity to purchase at a substantial discount on the retail price. 

Conversely, those who paid $150,000 towards a $200,000 caravan face paying an extra $160,000 to secure their item.

Customers may only get a few cents on the dollar through the liquidation process once the administrators, secured creditors and former employees are paid.

In a liquidation, customers are classified as unsecured creditors and rank last on the priority list, along with suppliers.

Mr Johnson said he would scrap Zone RV’s previous practice of forcing customers to make progress payments.

Zone RV’s new owner hopes to re-hire former employees and resume previous production levels of building 10 caravans a week. (ABC Sunshine Coast: Josh Dye)

Old contracts stipulated a 5 per cent initial deposit followed by two large progress payments and a final 20 per cent due on completion.

“That will not happen going forward,” Mr Johnson said.

“You’ll pay an industry standard 10 per cent deposit on placing an order and no progress payments — nothing else until your caravan is ready.”

Mr Johnson said family members based on the Sunshine Coast would help to run Zone RV, which would remain based in Coolum in the long-term.

He said former Zone RV chief executive Adrian Toft would be employed in a marketing role across the Zone RV, Essential Caravans and Design RV brands.

Mr Toft told the ABC in December that Zone RV had been in a “strong position” when he left in June 2024, although the company’s audited financial report shows a $4.75 million loss that year.

Liquidator sharpens focus

The liquidator, Cor Cordis, will now shift its focus to investigating former Zone RV director David Biggar, who is accused of illegally trading while insolvent as far back as 2023.

Cor Cordis alleges Mr Biggar breached his duties as a director and has reported its concerns to ASIC, the corporate watchdog.

Zone RV founder and director David Biggar. (YouTube)

Cor Cordis partner Rahul Goyal said the sale to Essential Caravans “ticks all the boxes” and had vindicated the strategy of maintaining a skeleton staff to deliver vans during the search for a buyer. 

While keeping the business trading, the liquidator oversaw construction of more than 40 vans for customers since December, which cleared at least $6 million off the creditor bill.

“Shutting the business down on day one would have been a poor outcome for customers, employees and creditors,” Mr Goyal said in a statement.

He thanked the staff who worked through the turbulent period after the collapse.

“Their efforts were instrumental in demonstrating the strength and viability of the business to potential buyers,” he said.

Mr Goyal told creditors in mid-January that he hoped to announce the new buyer within a week, but the process had dragged out.  

Mr Johnson described the negotiations as a “frustrating” experience. 

“That’s what happens when you’ve got administrators, lawyers, advisers, so many stakeholders all trying to make sure the outcome is correct,” he said. 

“It’s never as simple as anyone expects, so it’s a frustrating process.” 

The sale will settle on March 6, with another creditors’ report to be sent in April.

The ABC has contacted Mr Biggar for comment.