Hedge funds, administrator are the winners after Debenhams collapse - report

By

Nigel TAYLOR

Published
May 12, 2022

Failed businesses can yield rewards. Hedge funds that ran Debenhams look to have recovered most of their costs so far while the retailer’s administrators have clocked up £5.3 million in fees in the two years since the department store chain filed for insolvency.

FRP Advisory was appointed to Debenhams in April 2020 after the retailer failed for a second time, shortly after lockdowns forced the closure of its stores for good. 

According to new documents seen by The Times newspaper, Debenhams’ hedge funds have now received £314 million from the administration process. Meanwhile, unsecured creditors — including local authorities, HM Revenue & Customs and defined benefit pension schemes — are unlikely to receive any return.

It’s understood there were about £200 million of trade creditor claims at the time of the administration. The hedge funds have made most of their money back from the sale of the Danish arm of the business Magasin de Nord for £120 million, the document shows.

The administrators’ report reveals that FRP partners’ charges had increased from £495-£595 an hour to between £595 and £695, while a junior professional and support staff rate had also risen from £150-£195 to between £175 and £245. An FRP spokesman declined to comment.

FRP oversaw the sale of the 200-year-old department store’s brand and website to Boohoo Group for £55 million last January. The deal resulted in 12,000 job losses and 124 store closures. Almost 90% of the chain’s former stores remain empty.