Unsecured Focus DIY Creditors Left with Nothing

Michelle Remo, “Big 4″ observer
December 15, 2011 /

Unsecured creditors of discount retailer Focus DIY who are owed £821.1 million will get less than 1 percent for every £1 owed, as only £600,000 could be set aside for them from the outstanding charge assets reserved for non-preferential creditors, the latest Ernst & Young progress report reveals.

About 15,000 claims are awaiting reply from the Crewe-based home improvement chain, which went into administration last May, but only secured creditors GMAC and Bank of Scotland were fully repaid £32.2 million.

Following the collapse, 10,000 customer orders worth £3 million remained outstanding, while claims from unsatisfied customers continued to stream in. Small enterprise suppliers are owed £61.4 million while employees are owed £15.6 million. Intra-group creditors to Focus and its Do It All brand are owed £415 million.

FLP3, Focus’s second-ranking secured lender and an investment vehicle used by Focus DIY’s former private equity owner Cerberus Capital, has only received £25 million of the £214.7 million it was owed.

Focus’s mezzanine debt bondholders will similarly get nothing.

Ernst & Young administrators generated £100.6 million in profit for lenders from the sale of 60 stores to rivals B&Q and Wickes, and discount chain B&M retail. The deals saved about 1,200 jobs. Focus DIY employed 4,000 people at its 177 stores.

Moreover, through leases assigned to B&Q owner Kingfisher, Wickes, Asda, B&M and TJ Morris, Ernst & Young administrators made £45.8 million in profit.

“Despite difficult market conditions in the retail sector we successfully traded the business, for 11 weeks achieving sales in excess of £100 million, realising an excellent return for stock held at appointment,” joint administrators Simon Allport and Tom Jack, who brought in £4.6 billion in administration fees for E&Y, said.

“Importantly, we were pleased to achieve the sale of option agreements for 58 stores, resulting in the transfer of 1,200 jobs and further realisations of around £46m,” they added.

The Focus DIY brand has already been bought by MFI owner Walker Group from Ernst & Young for a reported £300,000 at the beginning of December 2011, reviving hopes that the brand could get back to its feet again.

 

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