The price of the Focus collapse
Published: 23 June, 2011
CREWE: Focus DIY owed more than £1bn to businesses, shareholders and funders when it entered administration last month, according to a new report from joint administrators at Ernst & Young.
It reveals that the £1.8m due to employees for overtime and holidays should be paid in full, but millions owed to other creditors, including Focus' private equity owner Cerberus, is unlikely to be recovered.
As secured creditors, Cerberus and GMAC Commercial Finance are owed £214.7m and £31.7m respectively. Although the sale of Focus assets is expected to generate more than £43m, it won't be sufficient to pay them back in full or allow for distribution among unsecured creditors.
The report lists trade creditors, ranging from garden products suppliers and wallpaper manufacturers to landlords and local councils. Companies that will lose out include Draper Tools and TNT Post.
The total amount owed to trade creditors is expected to be £61.4m, while landlords are owed £193.9m and HMRC is owed £7.7m. The deficit to the company's pension scheme will be in the region of £19.4m.
Taking into account the significant inter-company loans of £347m, the estimated deficiency to non-preferential creditors, excluding any shortfall to floating charge holders, will be about £649m. When shareholders and secured creditors are added to this, the estimated total deficiency to members is thought to be £1.09bn.
Since the date of the statement of affairs on 5 May, Ernst & Young has sold a string of the chain's 178 stores to the likes of Kingfisher, Travis Perkins and B&M Retail. But of the remaining 122 unsold stores, only one is trading today. Focus employed more than 4000 staff at the time of the administration.