A total of 4,500 high street jobs are hanging by a thread after BrightHouse, the rent-to-own retailer, and restaurant chain Carluccio’s filed for administration.
Sky News understands that the two companies were in court on Monday morning to formalise insolvency proceedings after closures triggered by the coronavirus outbreak tipped them into bankruptcy.
The administrations came within 72 hours of the government announcing emergency reforms to insolvency rules, including suspending the law on wrongful trading.
Alok Sharma, the business secretary, said the overhaul would be implemented retrospectively by the end of this week.
“These measures will give those firms extra time and space to weather the storm and be ready when the crisis ends, whilst ensuring creditors get the best return possible in the circumstances,” he said.
However, the decisions by directors at BrightHouse and Carluccio’s to press ahead with insolvency proceedings underlines the degree of distress facing many British companies.
BrightHouse, which employs 2,400 people, has appointed Grant Thornton as administrator, with an announcement expected by Tuesday morning.
The retailer, which offers loans to consumers to purchase electrical items such as televisions and washing machines, trades from 240 stores across the UK and has roughly 200,000 customers.
Its insolvency is likely to mean that customers with outstanding mis-selling complaints will receive only a fraction of the sums they are seeking.
Although BrightHouse’s problems are long-standing, insiders said that discussions with regulators and other stakeholders about restructuring its liabilities had evaporated after the COVID-19 outbreak.
Administrators are expected to put the business into effective run-off by continuing to collect outstanding loans from customers.
Some new lending activity may also continue for a limited period, sources indicated.
Analysts are sceptical that a buyer will emerge for a substantial part of its operations.
BrightHouse and Grant Thornton declined to comment.
There is greater optimism about the future of Carluccio’s, which trades from just over 70 restaurants and remains a popular brand among middle-class diners.
Administrators at FRP Advisory plan to utilise the Coronavirus Job Retention Scheme to furlough the majority of the company’s 2,000 employees whilst they assess options.
In response to an enquiry from Sky News, Geoff Rowley, joint administrator and partner at FRP, said: “We are operating in unprecedented times and the issues currently facing the hospitality sector following the onset of COVID-19 are well documented.
“In the absence of being able to continue to trade Carluccio’s, in the short term, we are urgently focused on the options available to preserve the future of the business and protect its employees.
“We welcome the latest update on the Coronavirus Job Retention Scheme and look forward to working with HMRC to access the support it provides for companies in administration and their employees.”