Online retailer Studio has gone into administration, with up to 1,000 jobs now in jeopardy and potentially leaving many of its customers out of pocket.
The company – one-third of which is owned by Sports Direct tycoon Mike Ashley via his Frasers Group – announced this week that it would appoint administrators, having failed to secure a short-term bank loan.
Its announcement has left many customers wondering why Studio isn’t taking new orders – and whether it will fulfil existing ones. So what do we know so far?
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Why isn’t Studio taking new orders?
While the Studio website is still online, it is not currently taking any new orders while the business seeks to appoint administrators.
Appointing administrators could take as long as 10 days, and there should be more information for customers once that has happened.
Will Studio fulfill its outstanding orders?
It isn’t yet known what Studio will do about its outstanding orders as its future currently hangs in the balance.
Studio has not yet given any indication as to whether orders will be fulfilled or customers will be refunded.
If the business stops trading altogether, customers may have to apply to the administrator in order to get their money back or to be able to return items.
However, those who apply to administrators in this way are not guaranteed to get any money back, as there will be many other parties with their own claims against the company.
Customers who bought via credit card are protected by Section 75 of the Consumer Credit Act, if their purchase was over £100. Debit cards are not subject to this protection.
Why has Studio gone into administration?
Studio Retail failed in its efforts to secure a £25 million rescue loan, forcing the company to go into administration.
In January, the company issued its second profit warning in as many months. Delays in transporting items and rising shipping costs have caused problems for the business.
It has also been left with surplus stock on its hands, and was hoping that a rescue loan would provide it with the working capital it needed to continue selling this stock.
However, banks refused to provide Studio with the loan it was seeking, leading the company to announce its intention to appoint administrators “as soon as reasonably practicable”.
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