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Exclusive: Sports Direct offers aid to HoF suppliers

Mike Ashley’s Sports Direct is understood to have offered loans to some suppliers that are struggling to cope with unpaid debts from the collapse of House of Fraser.

Industry sources have told Drapers that HoF owner Sports Direct has made the offer to several suppliers during negotiations, although the terms of any financial assistance are not known. It is also not known whether any suppliers have taken up the offer of financial assistance.

One source with knowledge of negotiations, who asked not to be named, said: “What [Ashley] is saying is that he has no real obligation to pay HoF debts, but he is saying [to suppliers], ‘OK, I’ll lend you some money.’”

One supplier to HoF told Drapers: “If that’s the case [that Sports Direct is offering loans], that is very good. There are other ways [Ashley] can assist suppliers, and if he does he will get a lot of support.”

Although Sports Direct is understood to have offered financial assistance, suppliers have been told in meetings they “will not be paid a penny” of the debts incurred before the department store chain was bought out of administration on 10 August.

One source said: “It’s not his debt and, if he paid one supplier, all the others would queue up to be paid.”

Despite Sports Direct’s stance, many suppliers expect larger brands to recover more than the anticipated 3p in the pound estimated by administrator EY for HoF’s unsecured creditors.

One source said: “The future of that business is secure in [Ashley’s] hands but he has to overcome the mire that he was placed in. The cynic in me says that, for the larger key global brands, some kind of deal will inevitably be done, as he will want to keep them on board.”

Sports Direct has been contacted for comment.

 

 

Readers' comments (4)

  • If HoF didn’t make a fist of it before, why is it going to be different with a new owner? This format is in rapid decline. Bad risk for landlords and suppliers alike.

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  • No denying this is good of Ashley. He’s not to blame for this mess and he shouldn’t be resonsible for clearing it up single handily. The suppliers played just as much a part of it as the previous management and buying etc. Any supplier who suggests otherwise needs a sharp lesson is managing risk.

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  • Whilst it is creditable that a major customer supports a supplier in need, what is not known are the terms of the loan. Further it is the case that as at 29 April 2018 Sports Direct International PLC had on its balance sheet cash at bank and in hand of £40.7m (up from £0.2m on the year before).
    Stephen Sidkin
    Chair
    Fashion Law Group
    Fox Williams LLP

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  • The evidence suggests that the previous management at HOF were at best disingenuous and at worst lied to their various suppliers. Ashley cannot be responsible for the mess that came before him, though weather cleaning it up will be a job too far is unclear.

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