Top 20 retail closures rack up £1bn in losses, new Company Watch data reveals

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Losses exposed

Losses exposed

Losses suffered by trade suppliers, landlords, employees and HMRC on the 20 largest retailers to file for insolvency since the beginning of 2012 totals £1bn. 

That’s according to new research into the scale of the damage being done to the UK economy by retail collapses by corporate health monitoring specialists, Company Watch.

According to Company Watch, it is highly unlikely more than a small portion of these debts will be recovered when the insolvencies are finished. On Peacocks for example, the administrators have estimated the dividend to unsecured creditors on its £321m debts will be less than 1p in the £.

Within this total there are unpaid tax liabilities of £134m, said Company Watch. The Game Group collapse, for example, cost the taxpayer £27m, while Comet cost £26m and HMV a further £21m. 

The full list of the losses to creditors and the taxpayer in these collapses is set out below.

            
HMRC LOSSES ON RETAIL FAILURES 2012 – 2013
   
         

TOTAL

 
COMPANY

FAILURE DATE

STORES

 JOBS

HMRC DEBT

UNSECURED DEBT

 
       

£m

£m

 
PEACOCKS

Jan-12

                    550

                9,600

19.1

321.0

 
CLINTON CARDS

May-12

                    767

                8,500

6.7

88.3

 
COMET

Nov-12

                    243

                6,500

26.2

66.0

 
GAME

Mar-12

                    600

                6,000

27.3

109.6

 
HMV

Jan-13

                    238

                4,350

20.7

88.8

 
BLOCKBUSTER

Jan-13

                    528

                4,190

4.8

119.6

 
JJB SPORTS

Sep-12

                    180

                4,000

3.0

94.9

 
BLACK’S LEISURE

Jan-12

                    306

                3,885

2.9

10.8

 
LA SENZA

Jan-12

                    146

                2,600

5.3

16.2

 
JESSOPS

Jan-13

                    193

                2,000

1.3

45,2

 
DREAMS

Mar-13

                    171

                1,675

4.6

44.0

(Note 1)
REPUBLIC

Feb-13

                    121

                1,600

3.0

32.3

(Note 2)
PAST TIMES

Jan-12

                    100

                1,000

2.1

10.2

 
MADHOUSE

Feb-12

                      38

                    700

1.6

3.4

 
RHYTHM & BOOZE

Apr-12

                      68

                    425

1.0

4.4

(Note 3)
ELLIE LOUISE

Apr-12

                      97

                    400

1.5

6.8

 
ETHEL AUSTIN

Jul-12

                      60

                    400

0.7

3.9

 
PUMPKIN PATCH

Jan-12

                      36

                    400

0.0

1.1

 
FENN WRIGHT MANSON

Mar-12

                      79

                    350

0.9

4.3

 
SHOON

Feb-12

                      23

                    280

1.0

2.3

 

TOTALS

 

                4,544

             58,855

133.7

1027.9

 
             
         

(Note 4)

 
             
Note 1: Pending the Statement of Affairs, estimate based on December 2010 accounts    
Note 2: Pending Statement of Affairs, estimate based on January 2012 accounts    
Note 3: In absence of detailed analysis in Statement of Affairs, based on Administrators’ Proposals  
Note 4: Excludes inter-group balances & bank debt        

The Company Watch research also highlights that 4,544 shops and 58,855 retail jobs have been threatened by the failure of just these companies alone. The data was prepared on behalf of retail commentator Paul Turner-Mitchell after the Treasury was unable to answer his Freedom of Information requests on bad debts suffered by HMRC for unpaid PAYE and VAT owed by insolvent retailers. Officials claimed they did not keep such statistics by industry sector.

Further research by The Local Data Company (www.localdatacompany.com) has confirmed the total number of shops closed since the start of 2012 in the top 650 town centres is 25,872 with 17,532 independent retail shops having closed.

Many of these smaller retailers will have been much further in arrears on their PAYE & VAT obligations, so the implication must be the debt owed to HMRC by those that have filed for formal insolvency will have added very substantially to the £134m write off already identified by Company Watch, researchers said. 

“This research is just the tip of the iceberg” said Turner-Mitchell. “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.”

In addition to the losses to the taxpayer from these major failures, local councils will have bad debts for many millions in unpaid business rates and central government is carrying the burden of benefits being paid to the estimated 60% of the 58,855 retail workers whose jobs have not been saved, said Company Watch.

Nick Hood, business risk analyst at Company Watch, said: “The retail sector has been one of the worst hit since recession first hit the UK in 2008 and the pain goes on and on, made worse by structural changes caused by the relentless growth of online and mobile/smartphone app shopping. It beggars belief that the government does not seem to know the extent of the damage to the Exchequer and the UK economy in general from retail insolvencies and it is investing so little time or money in reversing the decline of the UK’s embattled high streets.”