The winding-up of failed high street mobile phone retailer Phones4U will see the taxpayer lose out to the tune of £78m, after administrators confirmed unsecured creditors would receive just 0.4p for every pound owned.
But banks and bondholders who invested in the firm which went bust in September 2014 will receive 20-24p per pound - double the amount originally expected.
Around £168m is owed to unsecured creditors, including VAT and corporation tax due to HMRC, of which around £670,000 will be paid. Many customers also lost their money on pre-ordered phones they never received, with an estimated £4.8m shortfall to consumers when the firm’s 563 stores closed overnight.
Administrators PriceWaterhouseCoopers said that progress has been made in tackling unpaid staff wages and benefits totalling £3.4m, with the remainder expected to be paid by the end of 2015. Just over 3,500 of the 5,500 staff who worked for Phones4U were made redundant, while around 1,200 transferred to new jobs as 200 stores were sold to Vodafone and EE. Another 788 transferred to jobs at Dixons Carphone.
Around £100m will now be repaid to the secured creditors or bondholders that had lent £430m to the firm.
PwC said they had recovered £27m from selling stock, the bulk of which came from the sale of Apple handsets in the Phones4U main warehouse and stores. Another £11.4m had been received from one phone network provider in commission owed to Phones4U.
Private equity firm BC Partners, which took over Phones4U in 2011 before it was put into liquidation with the loss of thousands of jobs, recouped its own investment via a special dividend in 2013, after selling £200m worth of high-yielding bonds on the Irish Stock Exchange.
Phones4U went bust after Vodafone and then EE, two of the biggest phone operators, did not renew contracts to sell through its stores. Phones4U accused Vodafone at the time of having acted in a way to “inflict maximum damage” on the chain but Vodafone said the retailer was unable to offer it sufficiently competitive terms, hampered by the debt from its bond issue.
An investigation of the management of Phones4U before the company collapse has been completed by lawyers Emmanuel Quinn, and PwC said it was considering the findings and potential next steps.
The chain was founded in the mid-1980s by Midlands businessman John Cauldwell, who netted more than £1bn when he sold it for £1.5bn in 2006.
