UK: Collapse of Comet under investigation as final stores prepare to close
12:32 18 December 2012
EVENTS surrounding the collapse of electricals retail chain Comet are to be examined it emerged today, as the company’s remaining stores traded for the final time.
A fact-finding exercise by the company investigations branch of the Insolvency Service will cover the run-up to the appointment of administrators last month and Comet’s takeover by a private equity-backed investment vehicle in February.
The administrators, from accountancy firm Deloitte, are calling a halt to trading from today at the last 49 Comet stores to have remained open, having failed to find a buyer for any of its 235 outlets.
It means a total of 6,895 jobs have been lost at Comet including more than 100 in Suffolk and Essex, with stores in Ipswich, Chelmsford and Basildon being among the last to close today, in addition to branches already axed in Bury St Edmunds and Colchester.
Comet, which was founded in 1933, is one of the biggest retail casualties since the demise of Woolworths in 2008.
With insufficient funds raised from the winding down of the chain, the Government will have to pick up the tab for £23.2million of outstanding redundancy pay, accrued holiday pay and pay in lieu of notice.
Taxpayers will also lose a further £26.2m in the form of unpaid tax owed by Comet to HM Revenue & Customs, which is an unsecured creditor.
According to the creditors’ report compiled by Deloitte, the investment vehicle put together by American Henry Jackson of OpCapita, which raised funding from unnamed investors for the acquisition of Comet from French retail group Kesa Electricals, is expected to recoup just under £50m as a secured creditor. It also continues to own Comet’s warranties business, which is not in administration.
The investment vehicle received a £50m “dowry” from Kesa as part of the acquisition and was also repaid a £9.5m loan prior to the chain’s collapse.
The report states that Comet racked up losses of £95m in the year to April this year, having seen revenues slump by £200m compared with the previous 12 months.
This was followed by a further £31m loss in the subsequent five months as credit insurers lost confidence and withdrew support for the business.
Comet, which could still have a future as an online brand, has been hit by weak high street trading conditions and competition from online rivals.
In particular, it has been knocked by the shortage of first-time homebuyers who were key customers for larger household appliances.