Most of Carpetright’s £345m debts are unlikely to be repaid

Carpetright collapsed with debts of almost £345m, more than half of which are owed to customers, suppliers, landlords and other unsecured creditors who are unlikely to be repaid.

Administrators from PricewaterhouseCoopers, who were called in to the retailer this month, said unsecured creditors, including the technology group Microsoft and the carpet suppliers Condor and Betap, were owed £213m and that no more than £600,000 of that was likely to be repaid.

PwC did not put a figure on the amount owed to customers who had paid for flooring products that had not been delivered in the report laying out its proposals to creditors.

The UK tax authorities are owed £9.2m and employees at least £2.2m. Administrators said these sums were likely to be repaid.

Nestware Holdings, the owner of Carpetright when it entered administration, is owed £120m and administrators said it was unclear how much of that sum would be handed over. Nestware is owned by Meditor, a British hedge fund headed by the asset manager and poker player Talal Shakerchi.

More than 1,500 jobs are expected to go at Carpetright after a rescue deal for the retailer by its rival Tapi Carpets & Floors saved only a fifth of its stores and 300 staff posts.

The multimillion-pound deal finalised last week includes 54 stores but not Carpetright’s head office in Purfleet, Essex, and another 219 shops are closing. While 1,000 jobs went with immediate effect, some workers have been kept on for a short period to help pass on the business to its new owners.

PwC has been looking for a buyer for Carpetright after it filed a notice of intention to appoint an administrator on 12 July. The business has been hit by a slump in demand for high-cost homewares as households try to keep a lid on spending amid high energy bills and interest rate rises.

More evidence of that trend emerged on Wednesday, when the DIY retailer Wickes reported a near 4% fall in underlying sales for the six months to 29 June, driven by an 18.3% dive in sales of design and installation services on kitchens and bathrooms at established stores.

The group said the figure reflected “continued soft consumer appetite for larger-ticket purchases” and noted that its retail sales had also been affected by households sticking to smaller cheaper projects.

Carpetright has also been hit by a shift away from fitted carpets, more competition and a cyber-attack in April, which left it unable to trade for a week.

The administrators’ report reveal that Carpetright was forced to file for administration after HM Revenue and Customs threatened to issue a winding-up petition for failing to make VAT and national insurance payments.