This month we take a look at the huge debt crisis that Houser of Fraser has found itself in and how major brands are owed millions of pounds and stand to make little back following its administration.
Figures have emerged of how much the struggling department store, which fell into administration before being bought by Sports Direct for £90 million, owes its various suppliers.
Ralph Lauren’s Polo UK brand is understood to be owed £9.4 million, while Kurt Geiger is owed £4.8 million, Mulberry £2.4 million, Giorgio Armani £1.59 million, Phase Eight £3.4 million, Barbour £3 million, Warehouse £1.4 million, ScS Sofas £1.6 million, Superdry £236,000 and Aspinal of London £350,594.
Furthermore, XPO Logistics, which runs House of Fraser’s distribution centre in Wellingborough is reportedly owed a massive £30.4 million.
Since the takeover XPO has ordered workers to stop accepting goods and processing deliveries over the pay dispute, leading to House of Fraser’s website being pulled and all orders and deliveries being cancelled.
Suppliers such as these brands are classed as unsecured creditors, which often receive just 2p to 3p on the pound back in administrations such as this. This would mean that Ralph Lauren would receive just £282,000 back on the £9.4 million it is owed.
We can see from looking at the decline of this major store and others how this issue is growing more commonplace throughout the high street and within other industries. Now more than ever it is vital that businesses carry out company credit checks to know if the businesses they are working with are credit worthy. This is the best way of protecting yourself from bad debt. Monitoring the companies, you work with on a regular basis is another way of keeping a close eye on financial irregularities.