Call for Sports Direct to pay House of Fraser suppliers in full

After Sports Direct acquired retailer House of Fraser on Friday for £90m, just hours after the department store called in the administrators, has been urged to pay its suppliers in full.

Philip Day, the retail billionaire who owns Edinburgh Woollen Mill, lost the battle to buy House of Fraser but said Sports Direct boss Mike Ashley should do the “honourable” thing and pay the £70m owed to unsecured creditors such as suppliers and concession holders.

House of Fraser's unsecured creditors include wholesale suppliers, which get paid after their goods are delivered, as well as concession holders that are paid only after items are bought by customers.

Administrators EY completed the sales as a 'pre-pack' deal, an insolvency process that allows the buyer to buy assets but not pay pension liabilities and other unsecured claims.

House of Fraser is one of many retail high street stores that are struggling to get by as they fight against fierce online competition, rising business rates and weak consumer confidence.

Employing around 17,500 staff, House of Fraser had only just called in administrators EY when Sports Direct made the purchase on Friday. .

The closure of 31 out of 59 stores, which had been announced in June, will still go ahead, with the expected loss of around 6,000.

As Ashley was able to buy the department store group "conservatively" Day's spokesperson told The Times that, Day "would hope that Mr Ashley does the honourable thing and pays all suppliers and concessionaires on date and in full".

"The concessionaires have helped keep House of Fraser trading over the last year and the industry is now looking to Mr Ashley to do the right thing.

"Mr Ashley has said that relationships with brands and partners are vital to the future of House of Fraser, and ensuring that bills are settled with concessionaires will be critical to maintaining those relationships."