Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

Deloitte winds-up retailer Comet

by
18th Dec 2012
Save content
Have you found this content useful? Use the button above to save it to your profile.

Comet stores will open their doors for the last time today, as administrators from Deloitte wind up the electrical retailer after almost 80 years in business.

The administrators confirmed the collapse will cost the UK government £49.4m.

In November, the company announced it was going into administration and called in the Big Four firm. 

Neville Kahn, Christopher Farrington and Nicholas Edwards of Deloitte were subsequently appointed as joint administrators.

Since then, only 49 stores in the 240-strong chain remained open and there have been scores of redundancies, including voluntary and involuntary layoffs. 

The Deloitte team announced in a joint administrators' statement on 17 December that unsecured creditors owed £232.9m would get back less than 1% of money owed to them.

"There will not be sufficient realisations from floating charge assets to fully repay the secured creditors," the report read. 

The administrators did not expect any funds to be available to pay unsecured creditors, other than a small distribution of less than 1p in the pound. HMRC is owed £26.2m.

Deloitte announced costs to make all remaining employees redundant would come to £23.2m, which will be paid by the government's Redundancy Payment's Service (RPS).

82 stock suppliers have sought title retention of stock, accounting for 85% of inventory. Deloitte said compensatory payments of £22.8m have been made so far, wtih expected settlement payments totaling around £40m.

The joint administrators explained that total asset realisations, after operating and administrators' costs, will be £52m. They predicted that secured creditors will suffer a deficit of around £96m against debts of £145m.

While Deloitte will continue to look into the conduct of Comet directors, it's also busy trying to claw back money owed to the company by debtors and selling off its other assets, such as property and vehicles.

So far, the administrators have sold just one property in Glasgow and received £1.4m from debtors, out of £15.3m owed.

Comet's collapse is one of the biggest since Woolworths in 2008, with other recent retail casualties including Game and Clinton Cards. 

Comet has had a long, varied history and was sold by previous owner Kesa to HAL this year. The company continued making a loss despite turnaround plans. Earlier in 2012, Comet directors assisted one of its largest suppliers in securing a £20m invoice finance facility, which increased credit limits with select suppliers on an uninsured basis. 

With news of another potential sale of Comet in October, the facility was suspended. With supplier credit tightening up again Comet found it did not have sufficient funding to meet its obligations, prompting the move to administration. 

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.