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Phones 4U staff told: you may not be paid in full despite our £110m pile Phones 4U staff told: you may not be paid in full despite our £110m pile
(about 14 hours later)
Thousands of workers awaiting their fate at Phones 4U may have to wait months to receive unpaid salaries despite administrators revealing the collapsed retailer has £110m in the bank.Thousands of workers awaiting their fate at Phones 4U may have to wait months to receive unpaid salaries despite administrators revealing the collapsed retailer has £110m in the bank.
An internal document sent to 5,596 staff, seen by The Independent, tells them they will continue to be paid while PricewaterhouseCoopers seeks a buyer for the company.  But it  warns: “You may not receive the full amount of pay that you’d usually expect to receive”.An internal document sent to 5,596 staff, seen by The Independent, tells them they will continue to be paid while PricewaterhouseCoopers seeks a buyer for the company.  But it  warns: “You may not receive the full amount of pay that you’d usually expect to receive”.
The decision came as the administrators ruled out a last-ditch attempt by some bondholders to secure a debt-for-equity swap and claimed that three companies – EE, Vodafone and a third firm, thought to be Sky, Three or Dixons Carphone – are in talks to take over some of the 700 stores.The decision came as the administrators ruled out a last-ditch attempt by some bondholders to secure a debt-for-equity swap and claimed that three companies – EE, Vodafone and a third firm, thought to be Sky, Three or Dixons Carphone – are in talks to take over some of the 700 stores.
It was also revealed that around £90m is owed to the taxman in unpaid VAT and Paye – sums that are unlikely ever to be recovered.It was also revealed that around £90m is owed to the taxman in unpaid VAT and Paye – sums that are unlikely ever to be recovered.
All stores were shut on Monday after the private equity owner BC Partners called in the administrators, with bosses laying the blame at the door of EE and Vodafone after the network providers refused to renew contracts with Phones 4U. Some bondholders of the £430m secured debt questioned the administrators over the decision to close as Vodafone and EE’s contracts do not expire for several months. But they were told yesterday that the company would be out of cash and is currently haemorrhaging £750,000 a day.Administrator Rob Hunt said: “Over the course of the last few days we have considered all the restructuring options … [but] there is no realistic prospect of a debt-for-equity swap.” All stores were shut on Monday after the private equity owner BC Partners called in the administrators, with bosses laying the blame at the door of EE and Vodafone after the network providers refused to renew contracts with Phones 4U.
Some bondholders of the £430m secured debt questioned the administrators over the decision to close as Vodafone and EE’s contracts do not expire for several months. But they were told yesterday that the company would be out of cash and is currently haemorrhaging £750,000 a day.
Administrator Rob Hunt said: “Over the course of the last few days we have considered all the restructuring options … [but] there is no realistic prospect of a debt-for-equity swap.”
He also said most staff are paid monthly and would continue to receive salaries ahead of secured creditors.He also said most staff are paid monthly and would continue to receive salaries ahead of secured creditors.
However, staff may not even receive the full amount for the days worked before the administration on Monday.However, staff may not even receive the full amount for the days worked before the administration on Monday.
In a section of the document sent to staff entitled “Will I be paid for the work I’ve done so far in September?”, they are promised they will “be paid for arrears of basic salary and wages for the period of 1 September 2014 to 15 September 2014 and until such time as you are notified otherwise.In a section of the document sent to staff entitled “Will I be paid for the work I’ve done so far in September?”, they are promised they will “be paid for arrears of basic salary and wages for the period of 1 September 2014 to 15 September 2014 and until such time as you are notified otherwise.
“It’s our expectation that the payment will be made on your usual pay date in September. You may not receive the full amount of pay that you’d usually expect to receive.”“It’s our expectation that the payment will be made on your usual pay date in September. You may not receive the full amount of pay that you’d usually expect to receive.”
It adds: “A decision regarding outstanding accrued bonuses and commissions is currently under review.”It adds: “A decision regarding outstanding accrued bonuses and commissions is currently under review.”
However, the administrators revealed  that Phones 4U has £110m cash in its accounts;  is owed £147m by debtors, including £85m in commission from networks; and has £89m worth of stock, including £67m of new handsets and accessories.However, the administrators revealed  that Phones 4U has £110m cash in its accounts;  is owed £147m by debtors, including £85m in commission from networks; and has £89m worth of stock, including £67m of new handsets and accessories.
The company collapsed with debts of £760m, which are likely to be wiped out, according to ratings agencies. Around £200m is owed to unsecured creditors who are unlikely to see anything. These include suppliers and the taxman.The company collapsed with debts of £760m, which are likely to be wiped out, according to ratings agencies. Around £200m is owed to unsecured creditors who are unlikely to see anything. These include suppliers and the taxman.
Last night BC Partners said it was keen to meet bondholders to form a committee to look for any other options to save Phones 4U. It added that because of the unusual circumstances – where the company still has cash and stock, but will soon have no products or contracts to sell – the administration could last several months.Last night BC Partners said it was keen to meet bondholders to form a committee to look for any other options to save Phones 4U. It added that because of the unusual circumstances – where the company still has cash and stock, but will soon have no products or contracts to sell – the administration could last several months.
It said: “This week BC Partners and management are doing everything possible to support the administrator in maintaining jobs and recovering value for creditors.”It said: “This week BC Partners and management are doing everything possible to support the administrator in maintaining jobs and recovering value for creditors.”