House of Fraser owed brands brands half a BILLION

It was bought for £90million in a “pre- pack” by retail tycoon Mike Ashley’s Sports Direct, which is not obliged to pay suppliers money owed before its acquisition.

The details were revealed in a report by House of Fraser’s administrators EY, which said there would only be £600,000 at most left to pay unsecured creditors, although the prospect of any payout was minimal.

Warehouse operator XPO, which operates sites in Northants and Bucks handling deliveries to stores and customers, is owed more than £30million and stopped processing orders because of a payment dispute.

This has forced House of Fraser to cancel all online orders with thousands of customers affected.

House of Fraser, which took its website down on Wednesday, said: “Due to delays with delivering online orders, we have taken the decision to cancel and refund all orders that have not already been sent to customers. All customers affected will receive an email in the next couple of days. Please accept our apologies for any inconvenience caused.”

A Sports Direct source said it had been forced to cancel orders because XPO was being “totally unreasonable” and there had been “zero engagement” by them.

The source added: “It is highly unusual for a creditor of that type not to sit around the table. They are very much trying to hold the company to ransom.”

The EY report said House of Fraser’s financial position had “deteriorated significantly” before its collapse.

Draft accounts indicated a pre-tax loss of £4.1million in the year to January 27, while turnover in the 13 weeks to April 28 fell 7.7 per cent on last year.

Talks were held with 48 interested parties, with six making formal offers including one offering to buy the group on a solvent basis for £1.

House of Fraser’s creditors include Royal Mail, owed £135,465 and public relations firm Newgate Communications, owed £33,512.

Daily Express :: City and Business Feed

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