SmileDirectClub shuts down, leaves thousands of Aussie customers in lurch
A shuttered global telehealth orthodontics company that has left thousands of Aussie customers in the lurch owes almost $US900m ($A1.36bn) in debt, court documents reveal.
Pioneering dental company SmileDirectClub announced it was abruptly shutting down its global operations “effective immediately”, just months after filing for bankruptcy in a Texas court.
The move has left thousands of Australian customers without any support for their ongoing orthodontic plans.
SmileDirectClub rose to prominence selling dental aligners directly to customers, creating custom-made aligners and treatments on differentiating plans.
The company, based in Nashville, Tennessee, was founded in 2014.
But the teledentistry company last Friday announced they were winding down global operations “effective immediately” and ceasing further alignment treatments.
The move also affects its subsidiary company SmileDirectClub Aus Pty Ltd, which started trading in Australia in May 2019 and operating shops across NSW, Queensland, Victoria and Western Australia.
In a statement on the company’s website, SmileDirectClub said customer care support was no longer available for existing clients.
“Thank you for your support and letting us improve over 2 million smiles and lives,” the statement reads.
All pages on the SmileDirectClub site now redirect to the same statement.
It follows the company filing for Chapter 11 bankruptcy protection in Texas on September 29.
Documents filed in the US Bankruptcy Court reveal SmileDirectClub reported about $US890.6m ($A1.33bn) in debt at the time of filing.
Health measures imposed during the Covid-19 pandemic were blamed for impacts to its normal course of operation.
“SmileDirect experienced a significant decline in SmileShop traffic and related consumer spending, as well as numerous operational challenges as a result,” the court documents state.
“This dynamic continues to have long lasting effects on the debtors’ business and liquidity position.”
Supply chain issues, a shrinking labour force and rising inflation were also blamed for the company’s reported financial difficulties.
In its statement, SmileDirectClub said all pending aligner orders not shipped would subsequently be cancelled.
They also announced people would also lose their lifetime guarantees on their products as the policy “no longer exists”.
However, the company said customers were still expected to continue monthly payments until “payment has been made in full per the terms of the SmilePay program”.
“If you wish to continue treatment outside of our platform, please consult your treating doctor or your local dentist with any questions around future aligner treatment,” the statement reads.
SmileDirectClub said more information about refunds would emerge “once the bankruptcy process determines next steps and additional measures customers can take”.
The company also faced legal headaches in Australia after being fined $3.5m after being sued by the consumer watchdog over misleading claims to customers.
SmileDirectClub admitted it had contravened Australian Consumer Law between May 2019 and October 2020 by making false or misleading statements to customers on its website and in emails, text and in-store information.
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The Australian Competition and Consumer Commission (ACCC) said the statements falsely claimed customers may have been entitled to reimbursements from their private health fund for part of the cost of teeth aligners and related treatments.
But 98.5 per cent of the health insurance market did not provide coverage for the treatment.
“In the relevant period, at least 26,300 consumers signed up for SmileDirectClub’s aligner treatment at the cost of between $2499 and $3155,” the ACCC said in a statement.”
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