Insolvency Service to Investigate Comet Administration
LEXLAW Principal, M Ali Akram, interviewed by SKY NEWS in relation to UK Insolvency law and Tax treatment of Private Equity houses. Mr M Ali Akram, who practises insolvency law, was interviewed by Joel Hills live on Sky News Business and also featured in a report by Sky News’ Business & Economics Correspondent, Poppy Trowbridge, discussing the potential inequitable outcome in the liquidation of Comet Group Limited:
Our lawyers, M Ali Akram (Principal) & Robert Jones (Barrister) consider the the joint administrators’ report and the potential inequitable outcome on liquidation at: http://wp.me/p2MQoC-jq
The Sky News online article is at: http://news.sky.com/story/1026872
Vince Cable launches an investigation into the purchase and administration of Comet, as the last of its stores close for good. The Department for Business, Innovation and Skills has launched an investigation into the purchase and administration of troubled electrical chain Comet.
The Insolvency Service has been tasked with scrutinising the process following a number of complaints from MPs.The business was bought for £2 by Hailey Acquisitions, an investment vehicle put together by Henry Jackson of OpCapita, in November 2011.
They were given a £50m dowry from previous owner Kesa Electricals, now known as Darty, to run the retailer, which collapsed just a year later.Seven weeks after they were appointed administrators, Deloitte failed to find a buyer for the 235-store chain, and closed its remaining 49 outlets.The collapse of the company, which was founded in Hull in 1933 and employed around 6,895 people, is one of the biggest high street failures since the demise of Woolworths in 2008.
Deloitte said on Monday that it remained in talks with a small number of parties over the sale of internet operations and the brand.But the firm also confirmed the taxpayer will have to pick up a £49.4m bill for unpaid redundancy and tax payments.
With insufficient funds raised from the winding down of the chain, the Government’s Redundancy Payments Service will be required to meet the £23.2m of outstanding redundancy and accrued holiday pay and pay in lieu of notice.
The scale of the problems at Comet was also highlighted in the report, with the chain racking up losses of £95m in the year to April after also seeing revenues slump by £200m compared to a year earlier.This was followed by a further £31m loss in the subsequent five months as credit insurers lost confidence and withdrew support for the business.Hailey Acquisitions is expected to get payments of just under £50m as a secured creditor – a shortfall of £95m on the amount owed.But it has been reported that unsecured creditors, including HM Revenue and Customs which is owed £26.2m, will receive nothing.
Comet was hit by weak high street trading conditions, competition from online rivals and being unable to secure the trade credit insurance needed to safeguard suppliers.In particular, it was knocked by the lack of first-time home buyers who were key customers for Comet.Holders of £4.7m of unclaimed Comet gift cards and vouchers are also on the list of unsecured creditors.