Comet to close doors for final time
Administrator Deloitte fails to find a buyer
By Gaurav Sharma | CFO UK | Published 13:00, 18 December 12
Beleaguered electronics retailer Comet is to close its doors for the final time on Tuesday, shuttering nearly 80 years of trading history.
Since November, advisory firm Deloitte had been acting as the administrator of Comet at the behest of its private equity owners OpCapita. Following a restructuring exercise, the 236-store business narrowed down to just 49 stores. These too will now close in the absence of a viable offer from a potential buyer for Comet.
Furthermore, Deloitte said unsecured creditors would get back less than 1 percent of the money they are owed. The total of Comet's unsecured debt is thought to be £233 million of which £26.2 million is owed to the HMRC. Furthermore, taxpayers are also expected to foot the bill of redundancy payments currently owed to thousands of former Comet workers with the combined sum at £23.2 million. This will be disbursed by the government's Redundancy Payments Service (RPS).
Other unsecured lenders include landlords, electronics manufacturers and advertising outlets such as ITV and Google, all of whom have reportedly not been paid in some shape ranging from merchandise to advertisement slots. Landlords would be the first tier of those to be hit owing to unpaid rents and lease-breaches of Comet stores.
Furthermore, Deloitte said that Comet's secured lenders will not recover all of the sums they are owed either. Its calculations suggest they would receive only £50 million of a possible £145 million in claims, as Comet's assets against which their debts were secured would not be sold off at high enough prices.
Meanwhile, the UK Insolvency Service has announced an inquiry into Comet's collapse as the government's losses through redundancy payments and tax revenue would climb to £50 million, according to a spokesperson.
It is presently unclear what will become of the Comet brand. OpCapita bought the beleaguered retailer in February 2011 from Kesa Electricals. However, it failed to turn Comet’s fortunes around in the current macroeconomic climate
Though founded in 1933 as a battery supplier, Comet opened its first store in Hull in 1968 before growing into a retail chain. It was bought by Kingfisher in 1984, but had further changes in ownership in recent years without a turnaround in fortunes.
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