Online furniture retailer Homes Direct 365 owed consumers over £1m ahead of entering administration.
Steve Kenny and Richard Cole, both of KBL Advisory Ltd, were appointed as joint administrators of Homes Direct 365 Limited on 30 May 2025.
In the build up to its administration, the company, which was established back in 2009, saw profitability severely impacted by the Covid-19 pandemic.
Whilst turnover doubled, shipping/container costs increased fourfold, along with increased lead times. Despite the business having to deal with the fallout from Brexit, the company made a pre-tax profit of £200k for the year ended 31 May 2023.
However, since May 2023 the business again began to experience increased shipping/container costs and extended lead times which impacted cash flow.
Furthermore, the business was forced to relocate its warehouse premises during 2023 due to the landlord wishing to put the property up for sale.
The Directors managed a successful relocation to a new leasehold trading premises in Darlington. The move incurred significant costs which were in part funded by new secured debt finance.
This finance was also used to increase stocks levels as the company had been experiencing uncertainty on supply lead times which was resulting in an increased number of order cancellation/refund requests from customers.
This had a negative impact of profitability and ultimately contributed to a significant build-up of creditor arrears including circa £1.4m owed to HMRC in respect of VAT and PAYE.
A Time to Pay Arrangement with the HMRC was explored during November 2024, but proved unsuccessful in securing terms. In May 2025, the company continued to monitor options, with a pre-pack administration the likely outcome.
Detailed in management accounts for the period ended 28 February 2025, total sales generated £4.7m, down from £7.4m (against a period ended 31 May 2024), while pre-tax losses amounted to £443,000.
The business was marketed for sale through an accelerated marketing process, with a number of interested parties coming forward. However, no formal offers were received, ending the possibility of a pre-pack sale.
The directors considered the options available and decided that administrators should be appointed to conduct an orderly wind down of the company’s affairs.
Prior to the administration, the stock was sold for the sum of £49,000 and the motor vehicles were sold for the sum of £4,000.
Upon appointment of administrators, the company had a bank balance of £61,206, which was held in KBL Advisory’s professional client account immediately prior to appointment. These funds were transferred to the administration estate bank account.
A meeting was called with all employees to provide confirmation of the administrator’s appointment including an outline of the proposed strategy.
At this meeting all staff were made redundant with the exception of five individuals who were retained to assist with clearing the trading premises and gathering requisite information for the proposed administrators. The remaining staff were all made redundant by 6 June 2025.
As for creditors, preferential employee claims totalled £29,000, which are expected to be repaid from realised assets of £124,000. The HMRC, owed £1.4m, is expected to suffer a significant shortfall of £1.3m, while unsecured creditor claims stood at £2.3m, with £1.3m owed to 3,760 combined consumer creditors.
Employees are owed a further £234,000, while the trade is owed £764,000, which included Google Ireland, owed £434,000. It is expected that creditors will suffer a shortfall of £4m.
