The Homebase administration is a useful example of how a business sale after administration can preserve part of a retailer, while still leaving significant creditor and employee consequences behind.
HHGL Limited and Hampden Group Limited, trading as Homebase, entered administration on 13 November 2024. The Insolvency Service confirmed that Gavin Park, Gavin Maher and Adele Macleod of Teneo Financial Advisory Limited were appointed as joint administrators. At the time of appointment, Homebase had approximately 3,600 employees and 133 stores across the UK.
Immediately after appointment, the administrators completed a sale of up to 70 UK stores, the Homebase brand and intellectual property to CDS (Superstores International), trading as The Range and wilko. That sale was expected to secure up to around 1,600 jobs.
Later reporting suggests that, despite the sale, the administration has left around 2,300 redundancy claims and substantial unsecured creditor losses. Insolvency Insider reported that 1,299 unsecured creditors face heavy losses on £693 million of claims.
What happened in the Homebase administration?
Homebase entered administration after a difficult period for the retail and DIY sector.
The official Insolvency Service guidance confirms that the administrators completed an immediate sale of part of the business. That sale included up to 70 UK stores, the brand and intellectual property. It followed the sale of 11 UK stores to Sainsbury’s, with completion expected on a further three. (gov.uk)
This type of transaction can be an important part of an administration strategy. It may preserve trading value, protect some jobs, maintain customer goodwill and produce a better outcome than an immediate break-up sale.
However, it does not mean that every creditor will be paid or that every job will be saved. In large retail administrations, the saleable parts of the business may be separated from the wider liabilities left in the insolvent companies.
Why can a sale in administration still leave creditors unpaid?
A sale in administration is usually designed to realise value for creditors. It is not a guarantee that all creditors will recover what they are owed.
- The value achieved on a sale depends on what buyers are willing to pay, what assets are included, what liabilities are excluded, and whether trading can continue. In a retail administration, buyers may be interested in selected stores, brands, stock, intellectual property or online assets, but may not take on all leases, trade debts or employment liabilities.
- That is why a sale can appear successful from one perspective, while still leaving creditors facing losses. The business may survive in some form, but the insolvent companies may still owe significant sums to landlords, suppliers, lenders, employees and other creditors.
The Homebase administration illustrates that difference. A substantial part of the store estate and brand was sold, but later reporting indicates that unsecured creditors have still submitted very significant claims.
How are secured and unsecured creditors treated differently?
The ranking of creditors is central to insolvency outcomes.
Secured creditors generally have rights over specific assets or asset classes. Their recovery depends on the value of the secured assets and the terms of their security. Unsecured creditors do not usually have that same direct claim to charged assets. They are paid later in the order of priority and often receive only a small dividend, or nothing, depending on available funds.
Insolvency Insider reported that secured lender Wells Fargo was repaid in full, while Ark Finco recovered £57.5 million against an £80 million secured debt. The same report said that 1,299 unsecured creditors were facing heavy losses on £693 million of claims.
Those figures should be treated as reported outcomes rather than final legal conclusions unless confirmed from the full administrators’ progress report. They do, however, show the practical importance of creditor status. The difference between secured and unsecured debt can make a substantial difference to recovery.
What happens to employee redundancy claims after administration?
Employees are often among the people most directly affected by administration.
The Insolvency Service guidance explains that dismissed employees may be entitled to claim certain payments, including statutory redundancy pay, arrears of pay, holiday pay and compensatory notice pay. Claims may be made through the Insolvency Service where the employer is insolvent.
Some employment-related claims may be paid subject to statutory limits. Other amounts may rank as claims in the insolvency. Employees should therefore act promptly, keep payslips and employment records, and follow the claims process provided by the office-holders and the Insolvency Service.
In the Homebase case, later reporting suggests that around 2,300 redundancy claims arose from the administration. That figure shows that even where a sale protects some jobs, a retail administration can still have substantial workforce consequences.
What should creditors and directors learn from the Homebase administration?
For creditors, the key lesson is that administration outcomes depend heavily on creditor ranking, available assets and the terms of any sale.
Suppliers, landlords and unsecured creditors should move quickly to understand whether they have retention of title rights, unpaid invoices, set-off arguments, guarantees, deposits or other contractual protections. Delay can reduce the chance of preserving documents, identifying stock or taking effective recovery steps.
For directors, the lesson is different. Retail distress often develops over time through falling sales, stock pressure, rent liabilities, supplier arrears, tax debt and working capital constraints. Where those pressures become sustained, directors should take advice early and ensure that decisions are properly recorded.
A sale of part of the business may be a valuable outcome, but it will not remove the need to consider creditors, employee claims and director duties. If administration becomes likely, directors should understand the available options and avoid decisions that could later be criticised by administrators, creditors or liquidators.
Francis Wilks & Jones advises companies, directors, creditors and insolvency practitioners on administration, creditor claims, debt recovery and disputes arising from business collapse.
