September saw the announcement of the
retail company Phones 4U going into administration, after its last remaining
mobile operator partner, EE, cut ties with retailer. Since then, it has been
revealed that the company collapsed with £168 million of unsecured debt, which
means taxpayers stand to lose £78 million from the company’s demise. We’ve got
the latest information on this controversial topic.
About Phones 4U
Phones 4U currently has 720 outlets, including
550 stand-alone stores, with over 5,000 people employed. Since opening in 1996,
the company has suppliers with EE, Vodafone, Orange and O2. Since going into
administration, it has been revealed that the company owes millions of pounds
in debt, which breaks down as follows:
·
£69.2 million in VAT
·
£8.8 million in Corporation Tax
·
£168 million to HMRC
·
£4.8 million to Phones 4U
customers
·
£42 million to suppliers
·
£25.9 million to employees
·
£17.2 million in unpaid bills.
It has been revealed that as well as the
£168m of unsecured debts, Phones 4U owed £450 in secured debt to banks and
bondholders. PwC said £19.8m owed from a revolving credit facility will be
repaid in full to banks, but only 10pc to 20pc will be paid out to bondholders
owed £430m.
That’s the loss, what about the profit?
The only money that Phones 4U has raised
is from the sale of company shops to the mobile phone networks. Vodafone and EE
bought a total of 198 stores for £15 million, while Dixons Carphone hired staff
working at Phones 4U concessions in its Curry PC World stores. This has saved
more than 2,000 jobs, but 365 shops were still closed.
What does all this mean for Phones 4U Customers?
The company has announced that mobile
contracts signed through the retailer will be unaffected by the administration.
Similarly, if you recently purchased a phone before the administration process
you should still receive it.
The company have published a page with
several frequently asked questions surrounding the issues, so more information
you can click here.
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