Comet calls in Deloitte as administrators
The electrical retail chain Comet has appointed Deloitte as administrators, putting 6,611 jobs at risk.
The move confirms private equity firm OpCapita, which bought the 236-store business last year for the nominal sum of £2, has thrown in the towel.
OpCapita hoped to turn the struggling business around, and two weeks ago said it was examining a number of potential bids for the retailer.
Comet's demise is one of the biggest High Street casualties of recent years.
"Our immediate priorities are to stabilise the business, fully assess its financial position, and begin an urgent process to seek a suitable buyer which would also preserve jobs," said Neville Kahn, one of the Deloitte partners appointed as joint administrator.
"Comet has been battling the changing landscape of the electrical retail sector for many years. It has become increasingly difficult for it to compete with online retailers which don't face the same overheads, such as store rents and business rates."
The electricals chain has been hit hard by the drop and subsequent limp recovery in consumer spending in the UK since 2008, which has been particularly acute in the case of the big items that Comet sells.
Many of Comet's customers are first-time home-buyers, according to Deloitte, meaning that business has been hurt by the much tighter conditions in the UK mortgage market.
According to Deloitte, the company had been pushed to the brink by a cash drain caused by suppliers who had been unwilling to provide credit to Comet. Without such credit, Comet was unable to stock-up for Christmas.
"The inability to obtain supplier credit for the peak Christmas trading period means that the company had no realistic prospect of raising further capital to build up sufficient stock to allow it to continue trading," Deloitte said.
The administrator will run the business as a going concern while it assesses options for sales, closures and liquidation.
Mr Kahn said that all stores would continue to trade in the meantime, and all employees would continue to be paid.
On Thursday, Comet said that customers with outstanding orders were being told it was "business as usual until further notice", and that the group intended to fulfil deliveries of products that had been paid for.
However, when asked on Friday about whether gift vouchers and deliveries would be honoured, Deloitte told the BBC that they "don't have the answers yet" and it was too early for them to say.
Comet's customer care team is handling customer inquiries on 0844 8009595.
At 21:00 GMT on Friday, the company's website was inaccessible - a recurring problem in recent days.
The company's rivals are expected to benefit from the demise of Comet, with shares in Dixons Retail, which owns PC World and Currys, jumping another 11% after climbing 15% on Thursday.