// BrightHouse is edging towards collapse
// Grant Thornton is on standby
// The rent-to-own retailer has recorded a surge in customer compensation claims
BrightHouse is reportedly on the brink of collapse, putting 2400 jobs at risk of redundancy.
The rent-to-own retailer has put Grant Thornton on standby to handle an administration, Sky News reported.
The news came this weekend after the retailer recorded a surge in customer compensation claims.
The retailer was reportedly forced to put administrators on standby, with insolvency likely to take place in weeks.
BrightHouse has said it needed the support of stakeholders in a bid to be “successful” and is currently in active discussions with them.
BrightHouse most recently went through a restructuring back in 2017.
The FCA had called for the retailer to repay nearly 250,000 customers for failing to act as a “responsible lender”.
Advisors including EY and Freshfields Bruckhaus Deringer have in recent months been working along with Grant Thornton to consider different options for BrightHouse.
One of the options being considered is a scheme of arrangement to deal with mis-selling claims.
These claims are costing BrightHouse a reported £1 million each month.
Moreover, on Friday, BrightHouse said it was conducting a strategic review to maximise value for stakeholders.
“We have disclosed a contingent liability with respect to the uncertainty around the future volume of claims and the potential outcome of the test cases under discussion with FOS,” the retailer said.
“The level of redress claims from customers is putting increasing pressure on the available liquidity in the group.”
BrightHouse told employees it was considering selling its logistics and engineering business at the time.
Last month, the retailer fell to a loss of £16 million in its latest financial quarter after being hit by rising compensation claims.
The business’ loss deepened by more than a third from £11,893 million to £16,283 million year-on-year to September 28.
The retailer trades from about 240 stores across the UK.