The Department for Business, Innovation and Skills plans to probe the administration of Comet, whose collapse has left the private and public sector out of pocket to the tune of £257m. The Insolvency Service is to launch the investigation after receiving numerous complaints from MPs just as the doors close on Comet's last 49 …
So let me get this straight, you put £2 in get given £50M up front and then expect to be able to take a further £50M out of the pot when it all goes belly up? That's one hell of an investment. Was there ever an incentive for it to succeed? How is this possibly legal?
You forgot to add that people who had paid for goods but not received them will also be out of pocket unless they paid by credit card.
I understand the logic that there has to be some level of protection otherwise the risk would be too high to rescue companies in the situation comet was, but for the owners that tanked the company to end up with 50m and the taxpayer stumping up 250m and those that bought goods but didn't get them get squat. That isn't balanced. I agree with the staff getting redundancy payments but they should be funded by the capital realised and topped up by the government to statutory levels if there is a shortfall.
I don't believe the owners would deliberately tank the company but only they and the administrators seem to have come away with anything significant.
They put £140,000,002 in. Of that sum £50 is preferential debt, but there's not enough value in the business to cover all of the preferred creditors even (135.3M owed to preferred creditors and assets of only 81.7M), so if they're lucky they'll get a little over £30M back, net loss of £105M, which most companies would notice.
Steve Todd is correct. From those 2 figures quoted in the article alone its very difficult to tell how the VC bods made out - its quite likely they made the loss Steve Todd suggests.
Its actually rather poor Daily Fail quality reporting from the Reg on this one. If an IT site is going to attempt to cover finance in its articles its worth running them by someone with a finance background first.
Do the due diligence El Reg.
True it isn't clear. Also what wasn't clear is what happened to the 50m dowry. If that was then loaned to comet, forming part of the 150m loans then that would (depending on how you look at it) negate more of their losses.
I agree they did lose a chunk of their own money and I do believe they should get back some, but I think the redundancy payments should also partially be covered i.e. if the recovery is 30% then the first 30% of the redundancy payment is paid from the assets and the remaining 70% by the government. I'm not sure the system as it stands now works as well as it could so a review seems appropriate.
I'd be investigating
How so much money was made from a failed company and if this was already the business plan when they bought Comet.
By its sheer complexity it implys that someone is hiding an untruth.
Basic economics has been fogged to the point of distraction in the same way as the long and convoluted agreement terms that then as instagram/facebook has shown to want to steal from the innocent.
In this case I fail to see if the numbers are correct why insurance could not be secured seeing as the previous year the losses were 95m and in five months this had dropped to 31m even though the turnover had fallen by 200m it would have been far cheaper for the government to loan the money to support the improvement (over time) and the livelyhood of the business so someone was obviously not acting in the employees and publics best interests.
So I suggest you make it simple in future instead of how do you assest strip by complex infrastructure. Make no bones about it LLPs are just what they say they are Limited Liability Partnerships which means if they fail to make money they dont lose out everyone else does.
So get off that high accountancy horse because if this continues you wont have any businesses to account. Also for deloitte to have made 10.4M in six week is also an indication of the level of bottom feeding you accountant types are happy to go to its disgusting.
Annoying that these high street companies are going bust, they are some of the only genuine ones paying their taxes but are losing to overseas rivals who arent paying a penny.
That's the problem, they've been too slow to adapt to the mail order world.
Its not the High St thats the dead weight here, its those retail park stores.
Crippling rent and energy costs, and staffing those fucking barns, is going to be the death of PC world next.
Twinning with Currys won't save them, people aren't buying TV's.
Down in flames..
"Crippling rent and energy costs, and staffing those fucking barns, is going to be the death of PC world next."
Totally right, if you look at their red ink it's all about the rents. They like to be in places they don't need to be, which coincidentally are the places with high rent costs.
"Crippling rent and energy costs, and staffing those fucking barns"
Yes, what is the point of the extra 30 ft of headroom in a Comet store?
While the space may be suitable for warehousing and distribution, location within a retail trade parks is not going to be compatible with high numbers of artics.
I agree with you on this, whilst I use amazon heavily, I am considering changing my practice as I am supporting tax avoidance by using them.
Not the Comet Crash I was thinking of...
That comes from working in the Aerospace Industry for far too long and having a good friend (sadly deceased) who flow Comet 4's for BOAC.
Such a shame really... I remember visiting a Comet store as a kid on an industrial estate in Hull, they had Sinclair C5s for sale back then. Sad to see a household name and Hull based company go under. Went into a store lastnight to wish the guys good luck. All that was left on display were a few scart cables and modem leads. Comet, on behalf of myself and my family, thanks for all the Fridges, hoovers, washers, dryers, poor customer service, and for not offering me that job in infrastructure years ago.
Re: Goodbye Comet.
I bought my first turntable in Comet in Hull sometime in 1969-70,
I remember the experience well. I drove down Clough Road to an old brick building, the sort of building that was used in the 'I'm All Right Jack' film. It was probably in the same place that the trading estate with PCWorld occupies now. I seem to remember that it had big sliding wooden doors on rollers.
I remember that inside it really was a warehouse. Lots of racking, lots of stuff on pallets, lots of space for a fork-lift truck to manoeuvre, and a wooden shed.
In the shed was a man in a brown coat, and a heater.
Pinned to the insides of the shed were several A3 sheets listed all the things they sold (in fairly small print) and you were invited to find the item you wanted (in this case a Goldring turntable and a Cartridge) and then he went off to find it, leaving me and my brother keeping warm in the shed.
When he returned with the goods he filled out one of those funny receipt things in a blue-grey plastic box - there was always an odd-shaped hole at the top with was marked with the results of a thousand mis-aimed ball-point pens that seems to operated the mechanism that ejected the receipt. You gave him the money - or wrote a cheque (I think I paid cash. I was flush then.) he put it in the cash drawer and off you went.
How they dealt with a rush I can't imagine - we only saw the one brown-coated man.
Over the years I've bought lots of domestic electrical gubbins from various Comets, but they've all been big shops or retail park sites. Sad to see them go.
£10M fee for Deloitte? that's a good business to be in. Never mind venture capitalists, how about vulture capitalists.
Such fees are only really justified if they fix the companies problems and keep it afloat.
Good business to be in.
Unfortunately the accountancy firms are incentivised (unintentionally, I'm sure) by fees such as these to wind up companies rather than save them from administration/bankruptcy. As covered in the back of Private Eye ad nauseum.
Let's be accurate..
That's £10M for just 6(+) weeks, or 1/3 of a £Million every single day. I find that hard to justify for a basic winding up.
I'd have that investigated for sure. How many people did they have on this, and at what rates? I'd also use senior people who've done this before so they would indeed dig up the hidden skeletons. You don't audit with school leavers unless your intention is to OK whatever is put in front of you.
Re: Let's be accurate..
This is normal - I've worked for companies that have gone into administration and only received 5% of the money they owe - the administrators charge astronomical fees even though there is little risk to themselves.
You have to be a chartered accountant to be an administrator - there seems to be little competition and this whole area needs to be investigated. Of course, it won't.
when I was a lad
Comet was just an edge of town warehouse with a counter. You looked at the hifi/TV stuff on display, wrote down the stock number paid the guy and he got the stock of the back out for you. The high street hated them because they couldn't compete after paying their floor walkers who's job it was to pester you into spending more than you budgeted.
All was going well when suddenly Comet turned into an exact replica of the high street names they already had beat. All down hill after that. weird.
Who the hell uses shops these days?
It's a dying breed of individual who still goes shopping to real shops. With the internet and mail delivery, I never need to leave my keyboard to buy everything - clothes, food, white goods, gifts..... I can compare reviews, get the best price, and have it delivered at my convenience.
If the argument is 'yes, but what if you need it there and then' - try going into one of these white goods stores - 9 times out of 10 the item you want is out of stock, and they want to post it to you anyway or have you come back to collect! All the downside of shopping for goods and none of the benefits.
The high street and out of town shopping centres are archaic anachronisms of a pre-internet age.
Re: Who the hell uses shops these days?
So they say, but I've picked up several items from bricks and mortar stores in the last week that have been the same price or marginally cheaper than Amazon. And those shops pay corporation tax.
Did online grocery shopping once. Dented tins, bruised fruit and vegetables that looked like they'd been sat on and bread that had a day of shelf life left. At least in a shop you can pick out the nice looking undamaged stuff and do a 'reacharound' for the fresh bread at the back of the shelf.
Don't get me wrong, I shop online frequently for obscure or tech stuff, but those who shop for *everything* online are not getting the best value for money and are quite frankly, lazy.
Re: Who the hell uses shops these days?
Food is an example of goods best bought in a shop, under most circumstances. Further, I definitely think that supermarkets have an advantage over Amazon with their 'collect in store' services for general consumer goods.
Re: Who the hell uses shops these days?
> Dented tins, bruised fruit and vegetables that looked like they'd been sat on
The companies are obliged to credit you the cost of those items. They then have the option to send the van back round to collect said produce (which they never do).
It's in all our interests to do this; such shoddy service needs to be eliminated.
I had a problem with Sainsbury's a while back. They'd changed their policy so that anything still technically in date at the time of delivery was OK by them. I rejected each and every such item. After a couple of goes around this loop, they stopped sending me the crap; it was clearly costing them money...
Re: Who the hell uses shops these days?
When I used asda they were notorious for this, bread rock hard and 1-2 days left, and fragile stuff such as trifle was often damaged. Tesco are much better on the dates and rarely if ever get damaged goods, although as always its still better to go in store as you can pick the best out, more product choice and more offers available. But not everyone who uses online food shopping is done out of lazyness, some of us have mobility problems. They do however have very poor stock management, eg. I can do my order 2 weeks in advance, and still have substituded goods. I also wonder in the sense in some substitutes,sometimes goods that bear little resemblence yet on the website is listed much more suitable substitutes. On the subject tho I think the high street is dead, is a lack of conveniance and too much overheads to deal with, out of town shopping parks will have a longer life but they are probably on a ticking timebomb as well. Long term all that will survive is food and live entertainment venues. Rest will be internet only.
Payment for goods not delivered
I accept that if people have paid by Credit card they can get their dosh back, but it does seem rather strange that the law doesn't do something better for people who have paid for goods/services not delivered can't get their money back.
If a business isn't willing to work on Cash On Delivery terms, then any payments should go into an escrow account that isn't owned by/controlled by the supplier, so if the supplier goes bust before delivery then the money in the escrow account is safe. And if it turns out not to be there then the Fraud Squad get involved and Pentonville gets a bit more overcrowded.
There's even a youtube video about it
I've know one of the interviewees since school, me and quite a few of my friends have worked at Comet in minor roles. I can attest to the crap customer service which, to a degree, was driven by the sales commission system and, the remainder of it, by the nobs that such systems attract. The place was a dinosaur even before the crash, I'm amazed it's lasted this long.
For some reason the closing down sale attracted such a high proportion of total bellend customers (much more than the normal proportion, most of them are normal nice people) that the store my friend was running had to employ a security guard.
Re: There's even a youtube video about it
Reminds me of an experience I had when when Woolworths was closing. A woman was yelling at this poor employee that the 70% off (or something huge anyway) christmas lights she had bought had a single broken bulb. For goodness sake these people are about to loose their jobs and you are worried about a bulb! Get a grip!
Re: There's even a youtube video about it
Typical experiance in walking to one of these retails for me was.
About 1-2 cashiers depending on time of day/week. Christmas periods probably only time all cashiers manned.
Maybe 1-2 security gaurds.
5+ sales staff, or if a large place like pcworld 10+ sales staff.
A too tight credit system, my mum when I was a kid tried to get me a pc, but she was rejected credit.
I remember going into pcworld many years ago to buy a £300 monitor, whilst I was waiting for the manager (manager served me) to get monitor from back stock room, a security guard tried to escort me of the premises for acting suspicously. Luckily the guard agreed to wait for the manager to come back who told him he can back off, then a worker pushed the monitor for me on a trolley to the cashier and told me the security gaurds had managed to escort a new worker off the site once as well, what a joke.
Perhaps if driving to the shops didn't cost £10 in fuel duty then more people might go on the weekends, rather than juggle their bollocks in front of Amazon, x-factor, and Twitter.
"Hailey Acquisitions recruited former Dixons chairman John Clare earlier this year in a bid to inject some credibility in the turnaround plan."
That's where it went titsup
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