As we reported on Monday evening, Empire Direct fell into administration after a poor Christmas for most stores selling televisions and washing machines and the situation further aggravated further by the loss of credit insurance.
KPMG who are the appointed administrator to the company said the “business really suffered when credit insurers withdrew cover in October”. Credit insurers insure suppliers against the risk of the retailer defaulting on debt.
The Leeds-based retailer was one of the few independent electrical chains to have survived the competition from Kesa Electricals and DSG International, the owners of Comet and Currys, both of which have seen their own sales come under pressure as consumers refrain from buying “big ticket” electrical and electronic products.
With turnover of £152m, the company had bank overdrafts of £10.9m at its year end in March last year.
In the accounts, directors flagged “the ongoing availability of overdraft facilities” as a potential risk.
Empire Direct, which is 25 years old and was run and part-owned by Madan Showan, had 14 stores which have now been closed, as well as a large website. The company employed approximately 350 people.
KMPG said it was trying to contact customers who had paid for goods but not received them.
It is not clear at this point whether good ordered and paid for will be supplied or not.
It is also unclear who, if anyone, will take the risk of the warranties that Empire Direct offered as, so far as we can ascertain, these warranties were not insurance backed and the cost of any cover was being covered by Empire Direct. If this is the case then there will be, potentially, thousands of customers left without a guarantee that they thought they had.