Update 1st March 2020. It has been reported that Brighthouse is likely to go into administration.
BrightHouse, rent-to-own retailer, has announced that 30 stores will close, with 350 jobs to be cut.
It isn’t a good time for the company.
Recently, the Financial Conduct Authority found 400,000 people were paying a further £23 million per year on goods such as TVs and fridges, because of overpriced goods and interest charges which were excessive. Additionally, a £22.1 million pre-tax loss found in their latest set of accounts – financial struggles leaving no choice but to cut costs by conjoining redundancies with store closures.
Is there potential for a CVA underway? Is new finance needed?
For some of the 350 jobs cut, new jobs will be given within the business – though redundancies are still inevitable.
In April, the FCA will introduce a cap on interest rates, which BrightHouse will be able to charge their customers.
The stores which will be closed, are as follows:
- Aylesbury
- Basingstoke
- Bognor Regis
- Bromley
- Cowley
- Dunstable
- Eccles
- Gravesend
- Haverfordwest
- High Wycombe
- Leeds Merrion
- Macclesfield
- Maidstone
- Newark
- Newport
- Nuneaton
- Perth
- Rugby
- Scarborough
- Seaham
- Selby
- Southport
- Stafford
- Stirling
- Thetford
- Trowbridge
- Watford
- Weymouth
- Whitehaven
- Yeovil
Or you can watch the video that explains your rights
Readers Guide To the Administration Process
As Brighthouse went into formal insolvency, stakeholders often face significant uncertainty. Here is a breakdown of the legal framework and what it means for those affected.
1. What is a “Basic” Administration?
Administration is a powerful statutory process governed by the Insolvency Act 1986. It is triggered when a company is insolvent and can no longer meet its debts. An independent Licensed Insolvency Practitioner (IP) is appointed to take control from the directors. A key feature is the statutory moratorium—a legal “shield” that instantly stops all legal actions, such as winding-up petitions or bailiff visits, providing the “breathing space” needed to rescue the business or achieve a better result for creditors than immediate closure.
2. Who Gets Paid First?
The law dictates a strict hierarchy for the distribution of funds. Fixed charge holders (typically banks with security over property) are paid first. Once the administrator’s fees are covered, preferential creditors are next; this includes employees (for specific arrears) and HMRC for taxes like VAT and PAYE. Following these are floating charge holders, and finally, unsecured creditors—which include trade suppliers and customers—who are at the back of the queue and frequently receive only a small fraction of their debt.
3. What Happens to Employees?
Entering administration does not mean all jobs are instantly lost. For the first 14 days, the administrator assesses the company’s viability and may make redundancies. If a member of staff is kept on past this 14-day window, the administrator “adopts” their contract, meaning their ongoing wages and rights become a priority expense. Those made redundant can claim for unpaid wages and notice pay via the Redundancy Payments Service if the company has insufficient assets to cover these costs.
4. What About Suppliers and Customers?
Suppliers and customers are generally unsecured creditors. Suppliers should stop granting credit under old agreements and negotiate “pro-forma” (upfront) terms for any new supply to the administrator. For customers, deposits and gift cards are rarely honoured. However, those who paid over £100 via credit card may be protected under Section 75 of the Consumer Credit Act and should contact their bank immediately to initiate a claim.
