// BrightHouse officially falls into administrators
// Move will place 2400 jobs across 240 stores at risk
// Investors had withdrawn support for a proposed restructuring
BrightHouse has formalised its collapse into administration, placing the 2400 jobs from across 240 stores at risk of redundancy.
According to Sky News, the UK’s biggest rent-to-own retailer was in court this morning to make its insolvency proceedings official after appointing accountancy firm Grant Thornton as administrators.
The means BrightHouse, which is owned by a handful of private equity groups, has become the second UK retail casualty amid the coronavirus crisis, after that of Laura Ashley last week.
- BrightHouse falls to £16m loss in latest quarter
- 721 job cuts as Laura Ashley permanently shuts 70 stores
- Cath Kidston at risk of being next coronavirus casualty as it urgently seeks buyer
The administration also comes as investors withdrew support for a proposed restructuring of the retailer, which sells household goods through repayment plans.
Customers will still get their appliances looked after by the company, until their contracts run out, at which point the business will wind up.
However, there will be no new rent-to-own sales.
Administrators said they “will continue to trade the businesses in line with Government guidance as to remote working or, where essential services are being carried out, only in circumstances where we can provide for employee and customer safety”.
BrightHouse’s administration came within 72 hours of the government announcing emergency reforms to insolvency rules, including suspending the law on wrongful trading.
Business Secretary Alok Sharma said the reforms would provide firms extra time and space to weather the storm and be ready when the coronavirus crisis ends, and to ensure that creditors receive the best return possible.
Nonetheless, administrators were appointed to Caversham Finance Limited, which trades as BrightHouse, and Caversham Trading Limited (CTL), which supports the retailer’s logistics, warranty and insurance claims, this morning.
The administrators said: “The logistics and engineering business of CTL will continue to assist in dealing with those customers who have claims for essential home item repairs and will continue deliveries of smaller items to customers’ doorsteps, to ensure where possible, customers’ products remain in working order.”
In October 2017, BrightHouse was ordered by the Financial Conduct Authority to pay £14.8 million to compensate 250,000 customers to whom it lent irresponsibly.
In its quarter ending September 28, BrightHouse’s loss deepened to £16.2 million after it was hit by rising compensation claims.
During that time the retailer took out a £5.6 million provision to cover customer claims that their ability to payments had not been properly assessed by the company.
Its administration could mean customers with outstanding mis-selling complaints may not be fully compensated.
Last week, Laura Ashley became the first major UK retailer to fall into administration after the coronavirus pandemic exacerbated a recent downturn in profitability, with 721 employees set to lose their jobs after the permanent closure of 70 stores.
Before its administration, Laura Ashley operated 150 stores in the UK and employed around 2700 staff.
Meanwhile, Frasers Group has permanently closed down 31 Jack Wills stores in the past fortnight alone, as negotiations with landlords to keep the stores open came to halt due to the unprecedented uncertainty caused by the pandemic.