Deloitte said its first task as Comet's administrative receiver is to steady the ship and then seek anyone interested buying an ailing veteran retailer, hamstrung by huge overheads and facing fierce competition from leaner online rivals. Good luck with that. After days of industry chatter, Comet finally called in the receivers …
Will there be a firesale before Christmas?
I am sure that would be an opportunity for them to get some cash in before closing and hopefully give the poor guys working there some well needed overtime cash to get through their search of a new job.
Re: Good deals?
LOL, you what??
The workers are the first people to get stiffed.
It's a desperate scramble to pay off creditors and larger shareholders, then the management bolts out of the door with the remaining sacks of cash - leaving the poor workers stranded on a sinking vessel.
Are they still selling the gift cards...
.. they no longer honour?
would be a good day to announce a bonfire - sorry, fire sale.
As of this morning they're not honouring gift vouchers, and anything purchased but not delivered is only going to be delivered if it is in a distribution centre, otherwise tough - even if you have paid for it.
Hopefully the administrators are being paid in comet gift vouchers, as - like most administrators - they are not in any way interested in protecting customers, just keeping as much of customers' money as possible, even if goods haven't shipped or don't work.
Got a faulty device from them? Best of luck! "The repair operations are continuing and we will seek to complete the repair and return the item" Note "seek", not "we will complete". Goods delivered damaged? Tough. Goods DOA? talk to manufacturer, we're too important to deal with you, it's not as if we're now running the company that took your money, after all. Oh, wait a minute .. we are, but we're going to make sure we get paid before actually behaving honourably towards that company's customers.
Re: 5th Nov
And how has that ever differed?
Administration = corporate bankruptcy. It's like demanding the bankrupt give you the £10 back he owes you, while he's being chased for his house and other possessions. In terms of loss, a single customers means NOTHING.
At administration, the company is too far in trouble to recover. So the shareholders are already dead in the water in terms of seeing any further money. The staff aren't getting paid (from the boss to the lowliest employee) but they might still have a better pension fund etc. but there are NO MORE contributions to be made for anyone. It's not a question of favouritism but that the higher levels of management can ride it out easier because of their previous higher pay. Technically, they will be more out of pocket than any customer because they don't get paid and they were expecting to be paid MORE than anyone else.
In bankruptcy, the person you owe more gets priority. That's quite a sensible system because they invested more in you and trusted you more, and so should get more of their money back. You could say "We only have money to pay 50% of our creditors" and offer 50% of what everyone owes back, but that would mean suppliers having to massively increase their insurances against such things because 50% of £50m of stock is a bit more, and costs a LOT less to handle, than your 50% of the £5 cable you want to get a refund on. And the manager that led them into bankruptcy would still get 50% of his wages!
When a company goes bust, the only sensible way to handle it is to deal with the largest debts first. That's the conclusion that numerous courts have come to in numerous cases of corporate and personal bankruptcy. Because by the time you get down to the £5/10 range the chances are there will be no money left to even handle the administration of each case anyway, let alone provide a pittance of a refund. And those sorts of claims might even COST more money (which doesn't exist in the company and can NEVER be magically produced by that stage) to resolve than they would bring in. Courts cut their losses, or they would have millions of Comet customers suing them now and one bankrupt company could bring the whole country's law system to a halt.
Similarly, if *you* were going bankrupt, you wouldn't want to spend as long in court arguing about the £1.50 you owe your mate for the beer last week as someone trying to take your house away from you. One is infinitely more important, gets more priority, gets the bulk of the expenses of handling it, and when resolved probably means you have nothing worth £1.50 anyway.
You can decry the system as much as you want, it's really the only sensible way to handle it. And yes, the customer suffers. But the suppliers also suffer because they are unlikely to get all of their money back and one supplier might well lose more money than all the customers put together, if they have long contracts and invested in those contracts with new manufacturing, etc.
That said, those filing for bankruptcy (and especially commercial bankruptcy) should see MUCH harsher, non-financial, penalties. Personal liability in more cases (why didn't they know the suppliers were going to start denying them credit and scale back operations to give their staff decent redundancy and allow them warning to move on?), corporate penalties (not being able to run a company ever again, not being able to be a majority shareholder in a company ever again, not being able to ever be responsible for anything over X amount of money, etc.), and even more jail-time. Because once a company, especially, goes bust there's nothing you can do about it.
It was common in the 80's for software companies to hire programmers, put out a hit game, have the directors run off with the money, foist the company onto some unsuspecting victim, who have to declare themselves bust, sack all the programmers and then, next week, a new company starts up who cherrypicks from their old staff, and is run by the old director, and deals in exactly the same industry. It was so common that almost all software houses today, especially in the games industry, either came from those roots or their programmers did.
There needs to be regulation against that which hits those sorts of directors and others who mismanage companies hard. But in terms of handling a company that HAS NO MONEY to resolve its problems, you can't do anything but start with the largest debts and work your way down until the company literally has ZERO money in it whatsoever. You can't magic the money to hire staff to handle customer complaints once a company has gone bankrupt, and you can't not pay them or expect them to do it for free.
In terms of administration, the company itself is dead and only those who saw it coming could ever benefit from it (by selling off their shares early, cashing in their pensions, etc.). That's evidence for fraud, mismanagement, etc. alone so it doesn't tend to happen. It's not that the shareholders of Comet are all now lounging in the Bahamas and the director has his £1m retirement fund, they stop getting paid at the same time (and, if not, that money can be reclaimed from them personally). Now the shareholders are holding worthless bits of paper, the upper management are jobless and quite probably blacklisted from anything they might try to apply for ("Hire me! I bankrupted Comet!"), and the suppliers have given them millions of pounds worth of stock and not been paid. Sure, the upper echelons will survive it better and be parts of the old-boys-club, but that's nothing to do with the bankruptcy at all.
In bankruptcy, everyone loses but the company put in charge of administration (who make a profit from handling all those problems and deciding - independently of the company - who should be paid and how much). The problem is that end-customer are basically in the margin-of-error when it comes to their total investment in the company, even if they'll never see the £1000 laptop they bought.
And, to be honest, for anything significant, they should have used a credit card and then claimed it back. Anything less than that, and it's really not worth dealing with. Hell, even when Farepak went bust, the people who lost out most were suppliers not customers and that was national-news and had government intervention. Banks, maybe, would be a different matter because they don't really have "suppliers" as such, but the end result is still the same - you can spend £10,000 handling a £500,000 debt or £100 handling a £5 debt. There's only one sensible course of action that ensures the most money goes to debts, not administration.
Re: 5th Nov@Lee Dowling
A- "Lee writes lucidly, with speed and authority, but he must learn to be more concise"
Re: 5th Nov@Lee Dowling
Humour acknowledged and almost certainly true. It's hard for me to end a ramble.
Actually, in school I was always told off for my disgusting handwriting when I was younger. It was the cause of at least one "parent stomp" up to the school so they could shout at my teachers for letting petty things get in the way of my education. And because my hand hurt when I wrote too much, or too neatly, I learned to abbreviate everything I wrote - until the computer became an accepted homework device.
I also have a poor memory and speak too fast for people - too much data to output and not enough methods to store it at that speed. Someone overclocked my brain at some point, I'm sure of it.
Re: 5th Nov@Lee Dowling
As Winston Churchill once said "I apologise in advance for this long speech; I didn't have time to write a short one"
Re: 5th Nov
"Administration = corporate bankruptcy" is not always the case: there are well documented cases of companies being put into administration then being bought, things being sorted, with shareholders & officers taking a hit. but the accountants always have a very nice pay day thank you very much.
Surely the way it should be is that people should not be allowed to actively seek profits from failing companies - the administrators should be paid in shares or gift vouchers only: if they don't succeed in administration, (as opposed to receivers, who should shut things down - administrators are supposed to sort things out), then tough, they have failed at the job they are appointed to do and should not be paid a single penny until after staff have been paid and customers who have paid for goods have received their goods or got their money back. The staff and customers should come first, then creditors, and then, if there is a single penny left, then bottom feeders.
Oh, and don't make the assumption that everyone wants to use a credit card - that's just a lazy get-out for not having proper consumer protection once beancounters take over. People who pay for goods should get their goods or their money back, regardless of amount: administrators should be required to ensure that or force receivership with total wipe-out of all creditors (including said receivers and administrators).
Happy to change my view if you can prove no-one saw it coming and PwC's first ever involvement with Comet, it bankers or its creditors was Friday: otherwise there's a Big Four trying to profit from other's misfortune - 'cos that's never ever happened, before has it ... making a living from things like this is even lower than being an MP.
Re: 5th Nov
What have PwC got to do with things?
From the correct angle, all administrators look alike. Any angle, in fact.
@Philippe / Captain
the site says sale starts soon - but then again, didn't it always say that anyway?
No they aren't still selling the gift cards/vouchers any more, but it's bad luck for anyone who bought one last week. Although according to BBC the other day if they were purchased by card you may be able to get refund from card provider ...
Re: @Philippe / Captain
I do have sympathy for those with gift cards... but we've been here before with other retailers, and I've never seen the advantage of giving someone a gift card for any specific store and thus narrowing their choice.
That said, I can't see Amazon (or John Lewis if bricks and mortar is your style) going tits-up in a hurry.
Re: @Philippe / Captain
Spare a thought for the child with cerebral palsy who got a £500 gift cars from a charity to buy an iPad. They refused that too.
Re: @Philippe / Captain
not surprised, there is no requirement for company administrators to be living, breathing human beings with any knowledge of the words "morality" or "fairness".
Doubt there'll be much to get excited about
When Woolies went south, even on the final days, they hadn't discounted that much ... I think 20% was as low as they went. Bearing in mind this is 20% of the MRP anyway.
The more interesting question, is what is this going to do to the retail infrastructure landscape ? Local retail parks already have disused Carpetright sheds, so it's highly unlikely anyone is going to rent the Comet spaces.
Kingfisher centre, in Redditch is a case in hand. Empty units left by Millets, TJ Hughes, Peacocks, JJB sports, Past Times, Birthdays, Officers Club, La Senza. I really can't see them ever being used again. I also have doubts about Debenhams there, as the last few times I've been there and not found something I've been told they don't carry much stock and to "try the Birmingham branch".
We are living in interesting times.
Re: Doubt there'll be much to get excited about
Suspect you're right - although with no supplier credit there'll be nothing to mark down anyway.
Regarding retail landscape, you can't see much hope for a lot of retail areas given past over-expansion. On "our" patch in Redditch, look at the customer free wasteland that are Apollo 2000, Lidl, and Staples just outside the centre. Can't see them paying their way. BHS in Redditch and elsewhere all have that 1970's feel ("My name is Sam Tyler..."), and appear largely devoid of customers, so you have to wonder how long they'll hang on in there. Argos have announced a store cull - so how long Redditch will enjoy two stores for remains to be seen, but I'm guessing about three months. Jessops went bust, came back from the dead, but still struggle to get any volume in the world of Amazon, so I can see them folding again.
Re: Doubt there'll be much to get excited about
To be fair to Apollo2000, we bought a fridge a couple on years back from them - after googling they were cheapest - picked it up an hour later. And last year we bought our first-ever dishwasher, and the saleswoman was very knowledgable and helpful. Would happily go there againt.
was there at the weekend
there was a group (gaggle?) of sales guys all talking about the future, when a supervisor turns up and, in the middle of the store, starts shouting about how they "arnt closed yet", and "to start selling to the customers". Funny and tragic at the same time.
regards a firesale: There wont be a firesale, since they dont have credit, they wont have any stock.
All the gloom aside, id take them on. Fire most of the staff, and make the stores a physical web portal. Go in, fondle the stuff, then order at a kiosk at the door. This has the benefits of being cheap, as you have virtually no staff, and no stock as you just order direct from manufactuers, and its easy to operate.
Re: was there at the weekend
interesting idea: couple of caveats - don't sell gift cards / vouchers for a start! You could also setup concessions for manufacturers to rent, look at putting together financing packages that survive retailer demise (that can be done, although given derivatives are a bad word these days the ability to resell credit agreements is not an unuseful thing), and work out pass-through transactions so even though people have used your physical portal they are not actually your customer but are buying direct from manufacturer. You'd have to put in an amount of protection - UK-based subsidiaries of manufacturer should be on the hook for liabilities, and required to have stock in UK for any goods that are offered for sale in UK, with a customer acquiring a lien on goods at time of purchase if money taken.
Big 4 bean-counter in charge? Might as well plan the wake right now. Bugle or lament on violin? ;)