A war of words has erupted this week over House of Fraser’s collapse into administration and the subsequent treatment of its suppliers.
New owner Mike Ashley reportedly called for the department store chain’s former directors to face an Insolvency Service inquiry, claiming they “misled” its suppliers and Warehouse operators over payment of money they were owed.
But HoF’s former executive chairman, Frank Slevin, hit back at the claims, telling Drapers the directors had acted in a way that was “wholly proper”.
Ashley, who bought HoF for £90m through Sports Direct last month in a pre-pack administration deal, alleged that the retailer’s directors promised to pay suppliers with cash from its former owner, Chinese conglomerate Sanpower Group.
A report from administrator EY showed HoF owed creditors a total of £484m, including £30.4m to its warehouse operator, XPO Logistics.
Sports Direct and XPO have been at loggerheads since HoF went into administration on 10 August. Two distribution centres operated by XPO in Wellingborough and Milton Keynes have closed, reopened and closed again as a result of the dispute.
“I believe XPO and others were totally misled by Frank Slevin and the House of Fraser board, and the demise of House of Fraser should be fully investigated,” Ashley told The Sunday Times.
Slevin dismissed Ashley’s claims of wrongdoing on the part of former directors: “I am confident that any investigation would find that the actions by the directors in the lead-up to the administration of House of Fraser were wholly proper and the directors will robustly defend those actions. Throughout the process, the directors were well advised by [law firm] Freshfields on their responsibilities.”
HoF’s website was still redirecting to Sports Direct-owned retailer Flannels as Drapers went to press on Tuesday. Most of the stores are trading as usual.
Meanwhile, Drapers has learned that Edinburgh Woollen Mill Group (ewm) closed its HoF concessions – including Berwin & Berwin, Jaeger, Jane Norman and Calvetron Brands labels – last weekend, while it continued to negotiate with the new management team.
EWM’s concessions remained closed as Drapers went to press.
In an internal email last Saturday, EWM instructed concession staff to cease trading immediately, rope off their areas and remove stock from display.
“A member of staff must remain on the department at all times to ensure that no goods/products are sold,” the email stated. “Please ensure that you communicate with the adjacent store/concession staff to ensure sales are not processed through the till.” The suspension also applied to own-brand HoF product supplied by Berwin & Berwin.
Sports Direct and Sanpower Group have been contacted for comment. EWM declined to comment.