Do you recall in 2012 last year when the electrical retailer, Comet went bust and 6,000 jobs were lost but the profitable part of the business, the warranties was retained? Well here is an excellent follow up piece by the Telegraph suggesting that the words of outrage were no more than hot air. Since this article was originally published in 2013, the Government have remained very quiet on reforms to insolvency law. This has come despite serious claims being made against Sports Direct owner Mike Ashley and his habit of liquidating businesses.
“Ministers accused of ‘quietly dropping’ crackdown on insolvency rules for high street failures”
Labour shadow business secretary rips into Vince Cable almost a year after the Government launched far-reaching investigation into the collapse of electricals chain Comet
Ministers will today be accused today of “quietly dropping” a far-reaching review of the insolvency laws covering Britain’s high street stores almost a year on from the controversial demise of electricals chain Comet.
Chuka Umunna, the shadow business secretary, will table parlimentary questions on Monday demanding to know what progress has made given the collapse of both Blockbuster and Barratts this month and promises made by Vince Cable, the Business Secretary, last December.
He will also call for clarity from ministers on when a report into the circumstances surrounding Comet’s demise will actually be completed.
Nearly 6,000 staff lost their jobs when Comet fell into administration, while the chain’s owner, OpCapita, the private equity vehicle run by Henry Jackson, recouped almost £117m and retained its lucrative warranties business.
At the time Mr Cable promised to investigate Comet’s collapse and said the Government would review “best practice”, adding: “There may well be better ways to handle insolvency.”
Mr Umunna told The Daily Telegraph: “It is twelve months since Comet, the well known high street chain, went under causing thousands of jobs to be lost, stores across the country to close and supply chains built up over decades to be broken.
“One year on, ministers are still letting down the high street. Vince Cable promised in Decmeber that he would review the way insolvency works in the UK so that the lesson can be learned but no action has been taken.”
Critics of the insolvency laws have demanded a review of legislation allowing “pre-packs”, where owners tee up a deal to dump under-performing stores into administration, and buy the better ones back, free of debt. Often, third-parties are unable to bid for the business.
Comet is now in liquidation but the brand is still held by administrators Deloitte.
A spokeswoman for the Department of Business last night said the Insolvency Service was leading the investigation into Comet and it was still “proceeding”. She would not comment why it had taken so long.
The spokeswoman added that Teresa Graham, chair of the administrative burdens advisory board at HMRC, was leading a review into pre-packs and would report back at Easter.
Mr Umunna spoke ahead of an appearance at the Association of Convenience Stores conference tomorrow, where he is due to confirm Labour’s pledge that it would cut business rates for smaller stores in 2015-2016.
His attack came as it emerged that Gordon Brothers, the investment firm which bought Blockbuster in May, is likely to be the only party to recoup money from the DVD and video chains’s collapse.
As well as owning the business, Gordon Brothers is one of Blockbuster’s main creditors. OpCapita was the main creditor at Comet, having bought a right to the debt from previous owner Kesa.
Administrators running Blockbuster announced plans to close a quarter of the stores last week, triggering 450 job cuts. Some 1,000 jobs are at risk at Barratts after it fell into administration for the third time in four years. This article is attributed to the Telegraph and you can read the original article here”
So what do you think? Has Vince Cable decided he was wrong in the first place or do you believe he is quietly working away to make sure that all the people involved in insolvencies including the staff are protected as much as possible.