Fines 4U? Collapse of Phones 4U to cost taxpayers £78m

The collapse of high street telephone retailer Phones 4U is set to cost the taxpayer £78m, the firm’s administrators have warned.

The business owed £69.2m in VAT and £8.8m in corporation tax when it went under in September this year.

The surprise demise of the firm came after mobile telephone operators Vodaphone and EE refused to renew a deal to supply Phones 4U.

The £78m debt is part of a larger figure which Phones 4U owes to unsecured creditors. A total of £168m is outstanding.

This includes £4.8m in debts to Phones 4U customers – largely due to pre-orders for phones that were never fulfilled, £42m to suppliers, £25.7m to employees and £17.2m in unpaid bills, the Telegraph reports.

Less than 0.4% of the total sum is expected to be repaid, the administrator PwC, has warned in a report into the company’s collapse.

The company’s rapid folding has sparked criticism of the network operators Vodaphone, EE and O2, for their part in the events.

In addition, Phones 4U owner, private equity company BC Partners, has come under fire, as the firm made a 30% profit since it bought the phone retailer for £600m in 2011.

Phones 4U also owed £450m in secured debts to banks and bondholders. This is made up of £430m owed to bondholders and £20m to banks.

The banks are to be repaid in full, but bondholders will only receive 10-20% of what they are owed.

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Readers' comments (1)

  • Can we expect to see the owners and directors in the dock for corporate fraud?

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