Thompson set to lose out on Vergo collapse
DAVID Thompson, the owner of Vergo Retail had £2.75m tied up in the business when it failed earlier this year.
The Liverpool company, which operated the landmark Lewis’s department store in the city and 19 others around the country, went into administration in May leaving hundreds of customers out of pocket and more than 900 staff facing redundancy.
An administrators report shows that deposits or payments worth £640,000 from 2,000 shoppers will not be met but around £440,000 should be refunded by credit card companies.
Mr Thompson, who as finance director of Mk One shared in £55m from its disposal to Icelandic investment company Baugur in 2004 with Elaine McPherson, was Vergo’s only secured creditor.
He rapidly built up Vergo after acquiring the assets of Liverpool retailer Owen & Owen out of administration in 2007. Further acquisitions of Co-operative shops in the south and east followed but the business was hampered by a lack of credit from suppliers and onerous leases, said adminstrators.
According to the report by Sarah Bell at MCR the business was affected by general caution among trade suppliers who withdrew credit facilities leading to a working capital deficit.
“In order to maintain stock levels the mix of stock within the stores became more weighted in favour of concessions and hence the company profit margin was gradually eroded,” states the report.
During the year to January 10 the company saw revenue grow 38% to £50.8m due to the acquisition of 17 Co-op stores, but gross losses widened by 10% to £4.3m.
The company has stock worth around £2m but it is not clear if Mr Thompson will receive anything. The Co-operative Wholesale Society has a £2m charge over the loan as part of a 2009 deal to buy five shops in the south west. Trade creditors are owed around £4m.
There were two offers to take on the whole business but they both fell through. Administrators have now sold the Hexham store, saving 73 jobs, and are still in discussions over the disposal of a shop in Colchester.
