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Homebase, the renowned DIY and garden retailer, collapsed into administration in November, leaving unsecured creditors facing losses amounting to more than £650 million. Recent filings with Companies House reveal the full extent of the company’s liabilities as administrators attempt to unravel the business’s financial dealings.
Among the creditors impacted are prominent suppliers such as AO World, Halfords, and The Hut, which collectively face substantial losses. Around £100 million of the total debt is owed to trade creditors, including £750,000 reportedly owed to AO World for appliances supplied to Homebase’s kitchen division. This staggering figure highlights the widespread implications of the retailer’s financial turmoil.
Notable intra-group debt totalling £524 million is owed to Ark Finco, a company owned by Paul McGowan, the executive chairman of Hilco. Hilco acquired Homebase for £1 from Wesfarmers in 2018. While the administrators are investigating the status of this intra-group debt’s security, other secured liabilities include an £80 million working capital loan from Ark Finco. This loan was fully used and included unpaid interest exceeding £7 million at the time of the administration.
The administration process revealed that Wells Fargo, Homebase’s bank, declined to extend a lending facility of £95 million, which was essential for the retailer’s survival. With this working capital unavailable and an alternative refinancing option unachievable, the directors were forced to place Homebase into administration.
Immediately following the administration, 70 of Homebase’s stores, along with its brand and intellectual property assets, were sold as part of a £30 million pre-pack deal to Chris Dawson, owner of The Range and Wilko. This sale sheds light on the broader fallout of the collapse, as creditors grapple with the reality of likely unrecoverable debts.
Retail analysts have pointed to Homebase’s long-standing financial instability as the primary factor behind its downfall. While the pandemic briefly boosted demand for DIY products, these gains were not sustained, and Homebase reported significant financial losses in subsequent years. Experts argue that both the retailer’s management and its creditors could have acted sooner to address the company’s precarious position.
The administration continues to work through creditor claims, and the final amount owed remains subject to adjustment. However, with unsecured creditors at the back of the queue for repayment, the prospects of recovering the debts appear bleak.
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