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By | Paul Kunert 18th December 2012 14:58

UK gov probes Comet crash: Public, private sectors LOST £257m

But VC will pull £50m from flaming wreckage

The Department for Business, Innovation and Skills plans to probe the administration of Comet, whose collapse has left the private and public sector out of pocket to the tune of £257m.

The Insolvency Service is to launch the investigation after receiving numerous complaints from MPs just as the doors close on Comet's last 49 retail outlets today.

A BIS mouthpiece told The Channel: "We can confirm that the Insolvency Services has launched a fact-finding inquiry under section 447 of the Companies Act into Comet Group Ltd.

"The purpose of the inquiry is to investigate the circumstances surrounding its insolvency and to establish whether further action is required," the representative added.

The department is also reviewing the insolvency regulatory framework to ascertain if it is fit for purpose, it said.

It emerged yesterday that Hailey Acquisitions, which took over Comet in November 2011 for £2 and received a £50m dowry from the previous owner Kesa Electricals, is a preferential creditor and stands to bag circa £50m of its £140.3m debt.

Hailey Acquisitions had a £30m facility secured on inventory and certain receivables and a fixed and floating charge on a revolving loan facility.

Deloitte, for its six week-plus work as administrator, will be paid a fee of £10.4m.

This was as Deloitte confirmed in a statement of affairs that after collating the assets of Comet (£81.7m), the estimated deficiency for non-preferential creditors was £257m and £310.6m for all types of creditors.

The collapse of Comet will cost UK government £49.4m in redundancy payments and in lost VAT and payroll taxes.

Tech industry casualties hit by seven-figure losses include Acer (£7.3m), HP (£1.3m) and Fujitsu (£1.36m), while creditors in IT distributors include Micro P (£200,000), Northamber (£245,000) and Westcoast (£358,000).

Deloitte revealed that in the year to April 2012 Comet posted losses of £95m as turnover collapsed by £200m to £1.478bn. In the five months to 30 September losses were £31m.

Hailey Acquisitions recruited former Dixons chairman John Clare earlier this year in a bid to inject some credibility in the turnaround plan.

But without the backing of credit insurance, a safety net for suppliers when a company goes pop, the new owners struggled to boost business.

The retailer ran into cash flow difficulties as suppliers refused to stock its shelves on time for Christmas. On 2 November it called in administrator Deloitte, which set about finding a buyer for its 236 stores that employed 6,895 people.

Deloitte confirmed it had received 118 expressions of interest in Comet, 11 of which showed an interest in acquiring the business as a going concern. But only four offers were tabled and these were either insufficient or withdrawn after due diligence.

The spark has been extinguished on the High Street and indeed retail trading parks, so finding a suitable buyer with money to burn was never going to be an easy task. ®

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