PwC confirms creditors hit for £500 million Phones 4u collapse

Administrators initial report confirms that creditors will lose more than £500 million from retailers collapse in September

Phones 4u administrators, PricewaterhouseCoopers, has confirmed that creditors will lose more than £500 million as the fallout from the collapse of the retailer last September continues.

Unsecured creditors, which included HMRC, distributors and numerous other businesses, will receive just £672,000 of the £168 million they were owed. Secured creditors who purchased Phones 4u bonds issued by owners, BC Partners, will receive between 20-24p in the pound of the £430 million they were owed.

In total that figure stands in excess of £500 million for six of the 11 companies linked to Phones 4u which are included in the administrator’s report. You can download a copy of the full report here.

PwC also revealed it received approaches from 15 parties with a view to selling the business with 11 expressing an interest. However, administrators subsequently rejected any offers for the business they were “not considered in the best interests of creditors”.

The retailers staff were owed £3.4 million in wage arrears (up to £800), holiday and pension payments and PwC says that “significant progress” has been made in making these payments. It expects to pay staff in full within the next 6-9 months.

EE has already been forced to write off £336 million that was owed to it by Phones 4u.

Store network

A total of £15 million was paid for stores which were bought by two UK network operators.

EE paid £2.5 million for the 58 stores it acquired post-collapse with Vodafone paying £12.5 million for 140 stores.

A number of store-in-stores at Currys/PC World were transferred to Dixons Carphone at no cost with the remaining 365 stores closed with the loss of 2,503 jobs.

Cash and stock

Phones 4u had just £125 million cash at the bank across its Group when BC Partners pulled the plug.

It was also holding £89 million worth of stock and has generated £27 million from sales. Vodafone purchased £7.1 million worth of it.

“To date, a total of £27m has been realised from the sale of stock,” said the report. “The two most significant sales were of Apple handsets from warehouse inventory and returned from stores which realised £20.3m and £2.5m respectively.

“We continue to seek to maximise realisations from the residual stock (with a book value of £3.7m), including auction sales in a periodic and sensible manner so as to protect value.”

The report also revealed that it connected 1.3 million connections in 2013 and that its MVNO Life Mobile, bought by EE for £5 million, had 84,000 connections.

The next update will be in six months time.