Creditors to lose millions after Hotter Shoes administration despite rescue deal

The creditors of Hotter Shoes face a shortfall of more than £11m after its collapse into administration despite a rescue deal being completed.

The Skelmersdale-headquartered company was the main subsidiary of AIM-listed Unbound Group and was the trading name of Beaconsfield Footwear.

Over 400 jobs were saved when Hotter Shoes was rescued by WoolOvers Group out of administration for £6.7m in July.

READ MORE: Click here to sign up to the BusinessLive North West newsletter

However, a newly-filed document with Companies House has revealed that the creditors of Hotter Shoes face a shortfall of £11.6m.

According to the document compiled by administrator Interpath Advisory, the company’s largest creditor was Unbound Group itself which was owed over £1.6m.

BBK Shoes, which is based in India, was owed more than £837,000 while other creditors included Royal Mail, Facebook and Google.

Interpath Advisory is expected to file another document to Companies House in the coming weeks which will detail how Hotter Shoes entered administration as well as reveal more about how much in total its creditors are owed.

When it was appointed, Interpath Advisory said Hotter Shoes has been “adversely affected by difficult trading conditions” in the retail environment, and despite taking steps to address costs across the business, “creditor pressure continued to increase”.

The firm added that following an “extensive exploration of options, it became clear that it would not be possible to conclude a transaction on a solvent basis” and as such, the directors took steps to seek the appointment of administrators.

As part of the sale, all 421 employees and 27 stores and concessions were transferred across to the purchaser.

After the deal was completed, Unbound Group was handed a new deadline to complete a reverse takeover or face its shares being thrown out of the London Stock Exchange’s AIM.

Under AIM’s rules, Unbound Group must make a single or multiple acquisitions which constitute a reverse takeover within six months from July 18, the date its sale of Hotter Shoes completed.

Alternatively, the group can seek to become an investing company which would require it to raise at least £6m.

If it does not complete a reverse takeover or seek re-admission to trading on AIM as an investing company within the six-month period, its ordinary shares would be suspended from trading.