British electricals chain Comet turns out lights

18th December 2012, Comments 0 comments

British electrical goods retailer Comet held its final day of trading on Tuesday, as the government launched a probe into the controversial circumstances surrounding the chain's dramatic collapse.

Administrators Deloitte, tasked with trying to find a buyer for loss-making Comet, said the company's remaining 35 stores would shut Tuesday "in the absence of an acceptable offer for the whole of the business."

"A small team will be retained to support the wind-down of the company," financial group Deloitte added in a statement, following the loss of almost 7,000 jobs.

Comet last month slumped into administration -- the process whereby a troubled company calls upon independent expert financial help in a bid to remain operational.

As the company prepared to shut its doors, Britain's government said its Insolvency Service would investigate the run-up to administration and Comet's takeover by private equity firm OpCapita in February.

Comet had operated out of 235 branches spread across Britain, and online, up until last month.

Kesa Electricals last year agreed to sell Comet for a nominal fee of £2.0 (2.5 euros, $3.1) to private equity firm OpCapita. Kesa also agreed to inject £50 million into the business and retain responsibility for Comet's pension deficit of £46 million.

However, the group -- founded in the city of Hull, northern England, in 1933 -- continued to struggle in the face of fierce Internet competition, weak consumer sentiment and the flagging property market in Britain.

"We can confirm that the Insolvency Service has launched a fact finding inquiry... into Comet Group Ltd," a spokesperson for the Department for Business, Innovation and Skills, said on Tuesday.

"The purpose of the inquiry is to investigate the circumstances surrounding its insolvency and to establish whether further action is required.

"We are not in a position to comment further at this stage. To do so could prejudice the outcome of the investigation and any future action," it added in a statement.

Deloitte on Tuesday predicted that the government faced a hefty bill in the form of redundancy and accrued holiday pay, as well as for "pay in lieu of notice."

The state-backed Redundancy Payments Service would have to pay £23.2 million ($37.6 million, 28.6 million euros) to former Comet staff, according to Deloitte estimates.

Unsecured creditors -- including Britain's tax authorities HM Revenue and Customs which are owed £26.1 million -- would receive nothing however.

Comet's losses hit £95 million in the year to April, while revenues tumbled by £200 million, Deloitte said. In the following five months to September, the group lost a further £31 million.


© 2012 AFP

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