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Works creditors lose out

16.05.08 John Ryan

Creditors of discount chain The Works look likely to receive only a small percentage of the monies they are owed, with just £600,000 to be distributed between an estimated 2,800 creditors after a settlement on outstanding debts is made with the secured creditor, the bank.

Current unsecured liabilities are put at around £20m by administrator Kroll, meaning that unsecured creditors that do not continue to trade with the new company could receive little more than £200 each. The administration process is also likely to take more than a year, with a three-month liquidation and winding-up period to follow.

Among the unsecured creditors, including more than 200 publishers, are Parragon Book Service, which is owed £1.2m, HarperCollins, Carlton Books and Penguin. The Works is also in debt to Macmillan Distribution for £905,067.

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By Ouch

That's a painful amount of money for any business to lose. £1.2M to only £200! Surely though, companies like Parragon should have sold their books with a retention clause on the invoice - in which case they would legally still belong to them until paid for (although a big chunk are obviously sold now). The high street is obviously beginning to be hugely affected by the lack of consumer spending and I'm sure that the Works won't be the last retail company to go into liquidation owing millions.

16 May 08 08:37

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