Administration for Phones4U as a CVA is Approved for Mamas and Papas in the Same Week
The well known high street mobile phone provider, Phones4U, has entered Administration this week after two of its largest telephone operators (EE and Vodafone) chose not to renew their contracts to supply the retailer with their products.
The Company was thought to have been making profits but with a lack of support from the operators, the Directors of the Company were left with no choice but to have to close the doors to the public in order to ensure that it didn’t trade whilst insolvent.
It is sad news given that the 720 outlets that the Company operated employed some 5,596 staff as all these staff now face redundancy, and the prospect of diminished entitlements and/or no immediate future earnings if a buyer for the business could not be found. Not to mention that the government often has to pick up the tab for employee claims.
It can only be assumed that the suddenness of the withdrawals of the operators may have left the Administrators with insufficient time to find a buyer for the business on a pre-packaged basis. Although the high profile nature of a business of this type can often mean that a period of marketing the business whilst in Administration can result in a better deal for the creditors, therefore I guess only time will tell.
Representatives of Phones4U are said to have advised that their existing customers contracts are to be honored (meaning that the Administration would not affect them) but that any new business (if obtained) would be affected.
This news comes only a few days after the well known baby products business, Mamas and Papas, announced that their creditors had approved a Company Voluntary Arrangement for their business, breaking the silence of the brief reduction in high profile insolvencies in the market.
Experts are predicting further high profile insolvencies of this nature in the coming months, as Insolvency Practitioners throughout the country prepare for their seasonally busy periods of Christmas and New Year.
If you would like to find out more about an Administration or a CVA please feel free to give us a call.