Biggest retail administrations leave creditors with £1bn of unsecured debt

The largest retailers to have collapsed since the start of 2012 left behind a £1.03bn unsecured debt pile, hitting suppliers and the Government with massive unpaid bills.

The research, commissioned by independent fashion retailer Paul Turner-Mitchell, examined the largest 20 administrations in the past 15 months, including HMV, Peacocks, Comet, Game, JJB Sports and Clintons.

But Turner-Mitchell believes the £1.03bn is the “tip of the iceberg” because the data does not include the 17,532 independent retail shops estimated by the Local Data Company to have closed in that period.

Total debt owed to the Treasury - and therefore the public purse - amounted to £134m from the 20 retail administrations. Despite this shortfall, the Government has continued to pile pressure on the sector by implementing a controversial rise in business rates this month. The increase will mean retailers will have to pay an extra £175m in rates and could push already struggling store groups into insolvency, further exacerbating the problem.

Turner-Mitchell said: “How can Vince Cable say there is no crisis when the Government has no idea of the impact that retail insolvencies have on the public purse?  

“We hear the Government saying they value the retail sector but they have no idea.”

Turner-Mitchell resorted to hiring corporate health monitoring specialists Corporate Watch to carry out the research after the Government was unable to answer Freedom of Information requests. Officials claimed they did not keep such statistics.

Unsecured debt includes bills from trade suppliers, landlords, employees and the HMRC. It does not include debt from the banks.

Turner-Mitchell, owner of 25 Ten Boutique in Rochdale, said: “This research is just the tip of the iceberg.

“The Government is suffering from a policy paralysis and seems to be unable to grasp the nettle of serious structural change that’s needed to support our high streets.

“But while they continue to dither and fiddle in the margins, billions are being lost and jobs are disappearing.”

According to Corporate Watch it is “highly unlikely” that more than a small proportion of the debts will be recovered once the insolvencies are finished.

Figures show value fashion chain Peacocks, which fell into administration in January 2012, racked up the largest debt of £321m among the list. Administrators have estimated that the dividend to unsecured creditors will be less than 1p in the pound.

Financial risk management firm Company Watch’s business risk analyst Nick Hood said: “It beggars belief that the Government does not know the extent of the damage to the Exchequer from retail insolvencies and that it is investing so little time or money in reversing the decline of the UK’s embattled high streets.”