House of Fraser has been accused of making a deal with Sports Direct before it fell into administration while its administrator faces an official complaint.
According to City AM Paul Mckie, the head of luxury fashion house Fashion Collective, has launched an official complaint against Ernst & Young (EY) which handled the department store’s administration.
In a letter to the Institute of Chartered Accountants in England and Wales (ICAEW) Mckie, whose bid for 31 House of Fraser stores was rejected prior to its administration, alleged that he was told by EY that it had not been appointed on the morning of its administration on August 10.
He went on to accuse House of Fraser of agreeing a deal with Mike Ashley’s Sports Direct “prior to the administration”.
The department store fell into a pre-pack administration earlier this month, before being bought out by Sports Direct hours later for £90 million.
Another potential buyer Edinburgh Woollen Mill has also criticised the administration process, after its offer of £100 million, which would have included all the supplier and pension liabilities, was rejected in favour of Ashley’s £90 million bid.
As Ashley bought the chain out of pre-pack administration, he did not take on any of House of Fraser’s considerable debt pile.
Since his appointment he has been wrestling to solve disputes over debts owed to suppliers.
XPO Logistics, which runs House of Fraser’s distribution centre, is understood to be owed £30.4 million and has told its workers to down tools until a settlement is reached, leaving House of Fraser’s website out of action.
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