The suppliers of Comet are reportedly putting pressure on the company to pay in advance for its Christmas stock. This is because they have been unable to get adequate credit insurance. If the suppliers refuse to supply then simply the company cannot trade. This is what finally brought Woolworths to its knees.
We hear that the company has told staff that it intends to go into administration next week
The owners, OpCapita who bought the company for £2 but were effectively "paid" £50m to take it off Kesa's hands, have been stopping the slide in sales and have cut costs by reducing staff levels from 8,000 to 6,000. This has prompted OpCapita to seek a sale of the business which has prompted the suppliers action. Administration is not inevitable but with little interest so far, it may be the only way that the business can continue to trade.
The retailer could have gone into a CVA which would have allowed it to shut down its poorly performing stores, always assuming that its creditors would have supported such a move. Much would have depended on the position of its landlords.
The company could still exit the administration via a CVA but a pre pack administration may be the most likely option if a buyer is ready to take it on. But if a buyer can be found quickly and suppliers keep supplying then it may escape insolvency.
If you are an employee of Comet then please see our page help for employees. However, please do not ring our offices or contact KSA, as we have no more information than stated here.
Comet's customer care team is handling any customer inquiries on 0844 8009595.
Categories: What is administration