EK Cooling Solutions Going Down? Financial Disarray and Payment Delays (update)

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EK Cooling Solutions is currently experiencing significant financial difficulties. Reports indicate that the company has been unable to pay employees, suppliers, and contractors for several months due to liquidity issues and an accumulation of unsold inventory. An investigation by GN, citing former and current staff, revealed unpaid bills and wages extending up to four months, and in some cases, almost a year for accumulated raises. The financial strain at EK Cooling has been attributed to a surplus of products, with an assortment of 230 different water blocks, 40 cooling kits, 85 reservoirs, 40 pumps, 73 radiators, and 212 miscellaneous accessories in stock. This excess has led to substantial unsold inventory, valued in the millions of dollars, exacerbating the company’s cash flow problems.

Suppliers and partners now require upfront payments instead of offering credit due to these ongoing payment issues. Internally, the company faces communication breakdowns that have resulted in internal disputes and accusations of theft between different company divisions. This situation has compounded the financial mismanagement, leading to the non-payment of franchise taxes in Texas and the closure of local offices and warehouses, which employees discovered upon arrival at the sites.

In response to these challenges, EK has taken drastic measures, including selling a company building and various assets to manage debts. The company also plans to liquidate high-value items like prebuilt gaming PC systems and workstations under the EK Fluid Works and EK Fluid Gaming brands, outsourced to SwiftTech, in hopes of improving cash flow. Despite these efforts, the company faces significant hurdles in addressing its financial and operational issues, including an upcoming expensive participation at Computex 2024. EK’s management needs to prioritize effective communication and strategic financial planning to navigate through these turbulent times.

Update 24-4-24

EKWB now has responded to reports regarding its financial instability and payment delays to employees and suppliers. The company acknowledges past issues and states that corrective measures are being implemented.

Edvard König, the founder of EKWB, who reassumed the role of CEO in February, confirmed the challenges in a statement. He expressed commitment to restoring the company's reputation and improving operational practices. The company admitted to experiencing delays in payments to some external contractors and business partners, for which it has issued apologies and recognized the need for better communication.

König highlighted ongoing efforts to address these issues, including settling EKWB’s tax liabilities in the United States. The company aims to enhance transparency regarding payment delays and uncertainties and has vowed to improve its internal communications and relationships with subsidiaries. EKWB also plans to compensate for unpaid overtime hours, directing affected employees to contact a designated email address for resolution.

Relations between the Slovenian headquarters and the U.S. subsidiary have been strained, leading to the closure of EKWB’s Texas offices. Although the company has resolved its tax backlog in Texas, the situation has raised significant concerns about its financial management. Additionally, EKWB has taken legal action against at least two individuals, including a former employee who publicly discussed the company's internal problems. The company demanded the removal of a LinkedIn post about the issue and is seeking compensation for an alleged breach of confidentiality agreement. EKWB's public statement did not address these legal actions, and further inquiries have been made regarding their continuation.

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