A report from Phones 4u’s administrators PricewaterhouseCoopers (PwC) has revealed new details about the retailer’s collapse. Within the information released by the firm was the fact that £3.4m is owed to staff in arrears and that a number of ‘indicative offers’ for the business were rejected shortly after they were appointed.
Explaining more about the millions owed to staff, PwC said that ‘preferential claims principally related to claims for arrears of wages (up to £800) and unpaid holiday pay and pensions contributions’. The firm added that it had a timeframe for addressing the matter, stating that: ‘Significant progress has been made in reducing the arrears and we expect to pay the remainder over the next 6-9 months.’
The news was greeted with scepticism by deputy general secretary of the Communication Workers Union, Andy Kerr, who said: ‘When Phones 4u went bust last year many staff were simply told to “leave and never look back”. The pathetic protections for workers’ jobs and wages – as we’ve also seen recently with City Link – need addressing, as blameless workers shouldn’t pay the price of management failure when companies collapse.’
PwC did give an update into the ongoing legal investigation into the actions of the Phones 4u management, and said: ‘Quinn Emmanuel has completed their initial investigation on conduct of management pre-administration and we are considering the findings and potential next steps.’
The report revealed some other interesting details about the collapsed retailer’s demise, including information on the attempts PwC had made to sell the business. The administrators explained that shortly after taking over at Phones 4u it had sent a memo to 15 prospective purchasers. Despite 11 expressions of interest and ‘a number of indicative offers’ the administrators decided that these deals were not in the interest of creditors compared with a run-off. There was also the concern that a sale to a third party could damage Phones 4u’s interests in MNO receivables. PwC said that it would continue to evaluate offers but as time passed acknowledged that it was unlikely they would be able to sell.
Details of just how much was paid by the networks to acquire sections of Phones 4u’s retail business were also included in the report. It was revealed that Vodafone paid £12.5m for 140 stores, which included £7m worth of stock and 876 staff. EE, meanwhile, paid £2.5m for 58 stores with 356 staff. A total of 365 stores were closed and 3,358 staff were made redundant.
The cash the business had in the bank – which made headlines at the time the retailer went into administration – totalled £124m, of which £33.6m was used by Lloyds Bank to ‘discharge overdraft positions’ at Phones 4u’s MobileServ insurance business (£19.6m) and its MVNO Life Mobile (£14m).
Detailing how much creditors would receive, PwC said that secured creditors (bondholders) would receive between 10 and 20p in the pound. Unsecured creditors such as the HMRC, trade creditors and customers, who are owed £168m, are likely to only receive 0.4p in the pound.