Revenue spurns Budget rescue plan

A leading specialist in debt restructuring has hit out at Revenue & Customs for failing to back a refinancing plan that could guarantee the survival of the Budget DIY chain.

Hilco has offered to help the company make payments equivalent to 45p in the pound to all its creditors, including the Government.

More than 95 per cent of the trade creditors have given the proposals their support. But the Revenue has declined to back the deal.

"The one disappointment has been that Revenue & Customs have not yet given their support," said Paul McGowan, Hilco UK's chief executive.

"We are still talking to them, but their lack of support doesn't seem to reflect the Government's enterprise culture. It's a little bewildering."

The company faced collapse if its refinancing deal did not get the department's support, Mr McGowan said. "The Revenue's position is similar to the turkey voting for Christmas.

"Our proposal is to pay more than double the estimated recovery that would be gained through administration, which is the only alternative. We do not understand the Revenue's lack of support."

The Revenue is understood to be owed more than £500,000. The department declined to comment.

The Northern Ireland DIY chain, which employs 400 people, called in Hilco earlier this year. It owed more than £3m to all creditors and was on the brink of insolvency when Hilco acquired it in March. Hilco has already closed down Budget DIY's furniture retailer, Igloo, which owes a further £1.2m.

Hilco has carved a niche for itself in the retail sector by becoming an expert in distressed debt. It took over Lehman Brother's £100m debt in the struggling department store chain Allders just over a year ago, before helping administrators Kroll to sell on individual stores after the retailer went into administration.