Select creditors "owed £53m" after high street retailer’s collapse
Creditors for collapsed high street retailer Select have claimed to be owed more than £53 million as part of the firm’s administration.
Unsecured creditors, who include landlords and HMRC, have said they are owed £53.1 million from the firm after it became insolvent in May.
The fashion chain slid into administration after a sharp downturn in sales in 2018, with the company failing to hit sales targets for the period.
Select negotiated major rent cuts with landlords last year through a company voluntary arrangement (CVA), but it was unable to sufficiently steady the company’s precarious financial situation.
It secured a second rent cut through another CVA last month as part of the administration process.
A statement of affairs for the retailer by administrator Quantuma, revealed that landlords are looking to reclaim almost £3.5 million from the retailer as part of the unsecured non-preferential claims.
The document, released on Companies House, also revealed claims of more than £2.3 million from Her Majesty’s Revenue & Customs (HMRC), including £1.7 million in relation to unpaid VAT.
The company, which has 169 stores and employs roughly 1,800 staff, was bought out of administration by Turkish entrepreneur Cafer Mahiroglu in 2008.
Mahiroglu’s company, Ozdemir, is owed £2.9 million as part of the administration.
According to the statement of affairs, Select only had £1 million of cash in the bank at the time of the administration and held a further £2.8 million worth of stock.
Select, the trading name of company Genus UK, said that trading was in line with expectations following its first CVA in April 2018, but saw sales dive in the second half of the year.
It reported a “highly disappointing” Black Friday followed by poor festive sales prior to Christmas which were around 20% below its targets.
Revenues remained “notably below forecasts” in 2019 amid continued pressure on the high street, with Select blaming Brexit as a “contributing factor” to the retail malaise.
In the four months to March 31, the clothing business reported a turnover of £21.4 million, and reported a loss of £1.3 million.
The company said that while Ozdemir remained supportive, a tightening of Turkish legislation restricted the amount of financial support it could provide the retail business.
Select, which has an annual turnover of £77 million, posted a £15.5 million loss for the 18 months to December 2017.