With many well-known high street chains having gone into administration during the recession and beyond, it is fair to say that consumers are beginning to worry about the effect this will have on them. Last week, it was announced that fashion retailer Republic has been the latest to call in the administrators after poor sales and rising debts finally sank the popular high street chain.
HMV is one of a number of high street chains to enter administration
Since the demise of Woolworths back in 2008, this has been an all too familiar tale, with numerous brands which seemed secure before the recession succumbing to the economic pressure. Chains such as La Senza, GAME and more recently HMV have been particular lows in the sinking of high street traders.
Clearly the past few years have been incredibly difficult for retailers worrying about the future of their businesses, yet consumers are beginning to feel the strain too. With so many chains vanishing from the high street, it can be hard to predict which will be next – and when they go, what rights do customers will have with regards to previous and existing purchases?
The administrators of HMV recently came under fire after refusing to uphold the value of gift cards sold in stores nationwide after being called in to assess the financial position of the brand. This caused something of an outcry with the general public, and as a result of the stream of negative publicity, Deloitte agreed to honour the amounts owed.
However, not all stores which go into administration will be as high profile as HMV, meaning that launching a full scale media attack in order to make administrators pay attention could be difficult. Should you find yourself in possession of a redundant gift card, contacting the administrator directly is the best course of action – their details, by law, will be available in all stores within the chain they are assessing.
It is also worth doing a little digging into the background of the store itself as there may be a way to gain back your money without involving the administrators at all, although this route is decidedly riskier and more expensive. Sole traders or partnerships may be pursued for the amount owed, with such cases being eligible for judgement at the small claims court.
Visiting the Money Claim Online website or local county court will also allow you to initiate an action for the recovery of any debt – however, this will cost you money and, even if you are found to be the wronged party, there is no guarantee that the chain will pay.
The best chance of regaining any money you are owed, really, is to register with the administrators. If you hold an unused gift card or have ordered items that have not been delivered, you will be known as a “creditor” as long as you hold proof of purchase such as a receipt.
In the event of company insolvency, a liquidator will be appointed to divide and redistribute all assets held by the chain. The proceeds from this process will go to the creditors – meaning that if you have been recognised by the administrators, there is a much better chance of getting at least some of your money back.
Irja Howie, of the Trading Standards Institute, says that a lot of factors are outside the consumer’s control yet by remaining proactive there is a higher chance of a good outcome.
She says; “A lot will depend on the success of the administration process and on the severity of the business’s financial situation.
“Consumers who take immediate advice, and act fast, have the best chance of recouping some of their losses – but it is wise to keep expectations low.”
Consumers unsure about what steps to take in their individual situations are advised to call the Citizens Advice consumer helpline on 0845 4 04 05 06, where trained advisors will be able to provide them with the advice they need.
Have you struggled with a store recently gone into administration, or have you managed to have any debts owed redeemed easily? Do you think advice of this sort should be made available in stores which have entered administration, perhaps in the form of a leaflet on the counter?
