Maplin faces store closures as demise leaves creditors owed £150 million

UK electronics retailer Maplin is facing store closures, according to PwC administrators, after the store-chain began liquidation proceedings earlier in 2018. The collapse of the business sees the group’s creditors owed around £150 million, a sum which the sale of its assets is unlikely to recover, with private equity backers Rutland Partners likely to be the biggest losers of the process.

2018 has seen the UK retail sector stung by several high-profile liquidations. While Poundland owner Steinhoff seems stable, for now, a succession of companies have since fallen into administration, amid a trend which some experts are comparing to the retail crash of 2008. While Homebase still teeters on the brink of bankruptcy, Toys R Us announced its lapse into administration in February, and soon after the UK high-street was further hit by the news that Maplin had also collapsed.

Maplin was previously one of the UK's biggest electronics retailers, boasting an annual turnover of £235.8 million, and operating more than 217 stores and over 2,300 staff across the UK and Ireland, with head offices in London and Rotherham. The group began life as a mail-order business in 1972, providing electronic components to hobbyists, before opening its first shop in Westcliff-on-Sea in Essex in 1976. After changing hands several times since, the chain has been owned by Rutland Partners since 2014.

Now, it is understood that the electrical chain collapsed while owing creditors close to £150 million, with the bulk being owed to private equity owner, Rutland Partners. According to sources close to the firm, it is unlikely all of Maplin’s creditors will see any meaningful return from the realisation of its assets, compared to this debt. 

The business, which has since fallen into the care of PwC administrators, reportedly holds an outstanding £100 million in loans from Rutland Partners. A report sent to creditors revealed that Wall Street giant Wells Fargo is owed around £10 million, as principal secured creditor, while trade creditors, such as technology giant Google, are owed around £30 million, and, while PwC is selling off Maplin’s stock and other assets in a bid to return money to creditors, it seems unlikely that the auction will cover all of the investments owed to creditors. 

There have been as many as 60 expressions of interest from buyers, as PwC has been seeking buyers for parts of the Maplin business. While the most advanced discussions have focused on the retail chain’s brand, however, no sale has been secured yet. According to joint administrator Toby Underwood, at this point, PwC may have to commence a store closure programme, due to a lack of viable interest in the business – something that the remaining management team and PwC had said they were determined to avoid.

Speaking at the beginning of the administration process, Zelf Hussain, joint administrator and PwC Partner, had said, "Like many other retailers, Maplin has been hit hard by a slowdown in consumer spending and more expensive imports as the pound has weakened… Staff have been paid their February wages and will continue to be paid for future work while the company is in administration."

In a bid to tighten belts and maximise savings during the sale process, Maplin’s administrators have already made a string of head office redundancies, ushering over 140 head office employees out of the door since March. Now, Maplin’s remaining staff, which still stands at more than 2000, face an anxious wait to see whose jobs might be on the line next. 

Related: PwC administrators complete Conviviality sale to save thousands of jobs.