House of Fraser partner threatens legal action over store’s debt against administrators EY
A House of Fraser concession partner is considering legal action against the company’s administrator EY, claiming its classification of his business will cost him hundreds of thousands of pounds.
Ehab Shouly, who runs three tea rooms in House of Fraser stores, says he is owed over £300,000 from the company – the equivalent of two month’s sales.
He said he may challenge EY’s decision that the money which is owed to him is unsecured debt, meaning he goes to the back of the queue for any payouts.
His cafes sell directly to customers, but House of Fraser held the money for 55 days before paying it to Shouly, minus its commission.
He lost this money when the department store was taken into administration.
“It should be the court that should be interpreting the law on company insolvency, and not the administrators EY,” Shouly said.
Shouly contacted EY in August to say he disagrees with this classification of the money owed to him, but the administrator has not replied to his questions, he said.
He said concessions such as his business, The Tea Terrace, and House of Fraser customers whose orders were never delivered, should be the first in line to be repaid.
“The banks that collectively lent £400 million to HoF chose to take the risk of lending to this company.
“They made that conscious choice and decision themselves, knowing the risks. So why should they be the first in line to receive dividends from the company administration?” Shouly said.
Shouly, who has sought legal advice, called for the government’s Insolvency Service to investigate the House of Fraser collapse.
Sports Direct has bought House of Fraser, but has not taken on any of its debt.
EY said: “It is a matter for Tea Terrace if they wish to involve the Courts. We have a duty to act in the best interest of all creditors and not just one specific creditor.”