Missguided suppliers expected to be paid less than 2% of £30m owed

theguardian.com:

Suppliers to the online fashion retailer Missguided are expected to be paid less than 2% of the £30m owed to them by its main trading entity after the company collapsed in May.

The group will pay out less than 1.7p in the pound to factory owners supplying its main brand after it collapsed with long-term debts of more than £80m, up from £57m in 2021, an administrators’ report sent to creditors this week reveals.

“It’s just a massive kick in the teeth,” one supplier told The Guardian.

Unsecured creditors are owed £46m in total, including money owed to suppliers, HMRC and employees.

Administrators at the advisory firm Teneo said they were meanwhile considering legal action to pursue repayment of a £569,000 loan made to Rajib Passi, the father of founder Nitin Passi.

Rajib Passi, however, is not expected to be repaid any of the £24.7m he loaned the group to support it in recent years, while Nitin has agreed to repay a loan of £333,000 he took from the company.

Missguided’s private equity backer Alteri, which stepped in to try to rescue the group late last year, will receive at least £18m of the £58m it put into the online retailer, afterthe sale of its intellectual property to Mike Ashley’s Frasers Group for £20m. The tax authorities will also receive £530,000 in respect of VAT, employers’ national insurance and other payments.

The report says that Missguided, which grew rapidly after being founded in 2009, got into difficulties as sales at its main trading entity sank 42% from a peak of £282.1m in 2021 to £198.1m this year as pandemic restrictions were unwound and high street shops reopened.

Underlying losses, before debts and accounting adjustments, widened to £37m from £10m as costs rose, including an 88% rise in the cost of