Collapse of Phones 4U to cost taxpayer £78m

16/11/2014
Phones 4U administrators reveal retailer collapsed with £168m of unsecured debts, as well as owing £450m to bondholders and banks
The taxpayer stands to lose £78m from the controversial demise of Phones 4U, new documents show.
The high street retailer owed £69.2m in VAT and £8.8m in corporation tax when it collapsed in September, and administrators have warned they are only likely to recover a tiny fraction of the debt.
The debts to HMRC are part of £168m owed to unsecured creditors by Phones 4U. Less than 0.4pc of this will be repaid – the equivalent of £672,000 – according to PwC, the administrators.

These debts included £4.8m to Phones 4U customers, many of whom paid for pre-orders on new phones they never received. Other debts include £42m to suppliers, £25.9m to employees and £17.2m in unpaid bills.
The figures are included in the joint administrators’ proposals for Phones 4U Limited, the main trading company, which has been compiled by PwC and seen by The Telegraph.
The report lays bare the devastation caused by the demise of Phones 4U. The company collapsed into administration two months ago with the loss of almost 3,500 jobs after the leading mobile phone networks cut ties with the high street retailer.
The speed of the company’s collapse has sparked criticism of phone operators Vodafone, EE, and O2, along with the owner of Phones 4U, private equity group BC Partners, which has made an estimated 30pc profit since buying the retailer for £600m in 2011.
The administrators report shows that in 2013 the group recorded revenues of £1.16bn and pre-tax profits of £43.8m, double the £24.4m recorded in the previous year. It confirms that PwC has hired law firm Quinn Emmanuel Urquhart & Sullivan to help investigate the firm’s demise and the conduct of the former directors.
Administrators are obliged under insolvency rules to file a report on the conduct on directors with the Department of Business, Innovation and Skills. However, PwC said it had “identified a number of areas for further investigation” while compiling its report.
PwC said the company was forced to call in administrators after Vodafone said it would not renew a deal to supply Phones 4U in August and EE did likewise on September 12. The administrator said that the business was “not viable” without the support of networks.
As well as the £168m of unsecured debts, Phones 4U owed £450 in secured debt to banks and bondholders. PwC said £19.8m owed from a revolving credit facility will be repaid in full to banks, but only 10pc to 20pc will be paid out to bondholders owed £430m.
The only money that the administration has raised is from the sale of Phones 4U shops to the mobile phone networks. A total of 198 stores were bought by Vodafone and EE for £15m, while Dixons Carphone hired staff working at Phones 4U concessions in its Curry PC World stores. These deals saved more than 2,000 jobs, but 365 shops were still closed. PwC hopes to raise £940,000 from disposing of leases on 21 remaining stores. In addition, the administrators have received ” several indicative offers” for Phones 4U’s insurance business Policy Administration Services Limited.
* The number of empty shops on Britain’s high streets has increased for the first time in almost two years. The town centre vacancy rate in the UK rose to 10.3pc in October from 10.1pc in July, according to figures from the British Retail Consortium and Springboard.
The increase is the first since the opening quarter of 2013 and follows a tricky period for the high street as warm autumn weather dampened demand for winter clothing. Footfall to retail destinations fell by 0.8pc year-on-year in October, similar to the 0.9pc fall in September.

Fonte:http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11234357/Collapse-of-Phones-4U-to-cost-taxpayer-78m.html

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