Furnisher’s fall leaves 7,000 customers owed £2.3m
MILLIONS of pounds of shoppers’ money could be lost after the collapse last month of furnishings store Paul Simon.
The chain was taken over by administrators at Deloitte on April 2, and figures from the accountancy group show 7,000 customers were left £2.3million out of pocket, being owed on average £325 each.
The losses have prompted renewed calls for more protection for consumers who have paid money to a company which goes bust before delivering the goods.
Administrators have fulfilled 2,500 of the orders placed by customers since taking over the retailer, which is still trading from 16 of its original 50 stores.
But many customers are unlikely to see their cash returned, as there are insufficient assets to pay the retailer’s bank, HSBC, in full. It comes first in the queue for any cash left over.
Mark Garnier, Conservative MP for Wyre Forest, in Worcestershire, and a member of the Treasury Select Committee, said the case showed again why new rules are needed to ensure customers’ deposits are held in ringfenced accounts.
‘I don’t understand why there aren’t better regulations around these things. If you are taking significant amounts of money you are almost getting to be a bank – being a deposit taker,’ he said.
Paul Simon plunged to a £2.4million loss in the ten months before its collapse, management accounts show. The company made a small profit the previous year.
Creditors, including customers, are owed £11.4million. HSBC will get back £1.3million of the £2.1million it is owed, according to former directors of the company, but other creditors will receive only a tiny fraction of what is due to them.
The retailer could also face a claim from the Pensions Regulator, after flouting rules introduced last year forcing firms to enrol employees into a pension scheme.
‘We have taken steps to rectify this, and are awaiting confirmation from the regulator as to whether a claim will be made against the company,’ the administrators said.