Calls for bills to be settled
Ashley facing supplier backlash over House of Fraser deal
House of Fraser attempting to resolve supplier issues (pic: Terry Murden)
Mike Ashley is facing mounting problems over his acquisition of House of Fraser as fashion chain Jigsaw said that it has removed its stock from more than 20 stores.
Suppliers to the department store chain have been taking action as negotiations over payment become a major sticking point.
Edinburgh Woollen Mill owner Philip Day was among those who said Mr Ashley should settle the £70m outstanding bill.
Sports Direct is not legally obliged to pay suppliers money owed before its £90m acquisition as their debts were part of the administration.
However, the transition to the new owner is being obstructed by gathering demands for bills to be paid. A payment dispute with its warehouse operator was blamed for customers not receiving goods ordered online. The company cancelled them and offered refunds.
Warehouse operator XPO Logisticis is owed £30m and stopped processing orders last week because of the dispute.
On Wednesday, House of Fraser took its website offline .
Documents published by the administrators at EY also show that six parties made formal offers for the business.
EY said the offers were assessed using a number of criteria, including “value, timing and deliverability”.
Three were rejected on timing issues while another wanted to buy House of Fraser on a solvent basis for £1.
The administrators said: “This was conditional upon reaching an agreement with the group’s secured lenders to write off the vast majority of their loans, allow their priority ranking to be diluted and with the repayment of the remaining balance of their loans to be on deferred terms.”
This bidder also proposed an offer to acquire House of Fraser and its assets from an insolvency sale at a price of £100m.
“During the evening of 9 August 2018, the party communicated that they could not justify the transaction commercially and they were withdrawing their interest.”
EY said: “This then left the Sports Direct group offer as the best and only offer capable of being completed.”
Mike Ashley, who controls Sports Direct, has vowed to keep most of House of Fraser’s 59 stores open.