DELOITTE ADMINISTRATORS have been lined up to electrical retailing giant Comet.
Following reports last week that trade credit insurers had withdrawn from the business, the company is seeking an insolvency process, The Times reports.
Without trade credit insurance, suppliers ask for payment for goods up front, which causes severe cashflow difficulties.
If the business were to collapse, it would dwarf the largest administration so far this year, in terms of redundancies. The retailer employs about 7,000 staff across its 243 stores. The largest collapse in terms of redundancies this year was Peacocks and Bonmarche which saw 4,500 staff laid off.
Private investment company OpCapita bought Comet in February from Kesa for £2 but took on a £50m dowry left by the previous owner. However, it was recently reported that OpCapita were looking to sell the retailer, sparking the withdrawal of trade credit insurers.
Tom Leman, head of retail at international law firm Pinsent Masons said: “While people will point to the depressed consumer market as the cause of yet another insolvency, we shouldn’t forget that electronics is one of the most competitive markets with a huge shift to on-line sales.
“Comet was in trouble the first time round when Kesa sold Comet to OpCapita, hence the £50m dowry and the retention of the pension scheme. It looks like even that drastic surgery and the expertise of OpCapita has not been able to address the downward spiral of essentially a bricks-and-mortar retailer.
“Landlords will be upset, but perhaps only a real carve-up through administration will provide the business with a cost base and new ownership that can enable it to start to build from the bottom up again.”
A spokesperson for Deloitte, which worked on the collapse of Woolworths and closed more than 800 of its stores, declined to comment on whether administrators from the firm were lined up for appointment.
Manufacturer DMG Steelworkers has been sold out of administration in a pre-pack deal by insolvency and restructuring firm CVR Global
By threatening creditor returns, the government could undermine the UK’s World Bank insolvency ranking and cost creditors £8m a year, trade body R3 warms
Lee De’ath and Richard Toone, partners at CVR Global, were appointed joint-administrators of Lexden Centre (Oxford) Limited, trading as Colchester English Study Centre (CESC), on 29 June 2016
Peter Saville, Ryan Grant and Anne O’Keefe of AlixPartners will now become the supervisors of the CVA and monitor the implementation of the proposal