Published on March 30th, 2020 | by The GC Team0
Coronavirus blamed for Brighthouse collapse
The UK’s largest rent-to-own retailer Brighthouse has appointed administrators Grant Thornton after its 240 stores were forced to shut due to the coronavirus.
The company, which has been struggling under financial pressure for some time, employs 2,400 people which, according to reports, have been furloughed by administrators who will take advantage of the Government’s COVID-19 80% pay provision.
Brighthouse shut 30 of its stores – around a tenth of its estate – with the potential loss of 350 jobs in February 2019 following reported half-year losses rising to £22.1 million and shortly before the Financial Conduct Authority confirmed a price cap on rent-to-own firms.
The FCA discovered that, in some cases, rent-to-own customers were paying in total more than four times the retail price of some goods. The cap, which came into force 1st April 2019, would save UK consumers up to £22.7 million a year, the organisation estimated.
Previous work by the FCA had resulted in redress packages worth nearly £16 million in total for around 340,000 consumers of rent-to-own firms BrightHouse, PerfectHome and Buy As You View.
Brighthouse had thrived during the recession and the Government’s austerity measures but late 2017 entered into a £220 million restructuring deal to reduce its external debt. The company had also been under financial pressure from dealing with mis-selling claims.