Beds retailer Dreams’ new private equity owner Sun European Partners has paid suppliers and trade creditors £23m to clear some of the debt owed when it collapsed into administration.
Dreams collapsed into administration with debts of £106m when it was bought through a pre-pack administration by Sun European Partners in March, The Telegraph reported.
The private equity firm has paid out 75p in the £1 to trade creditors as well as £11m of customer deposits. However, £65m of debts will remain unpaid including £8m to trade creditors and £28m to former owner Exponent and banks.
The retailer also owed £24m in future rental payments which will not be paid.
Pre-pack administrations have proved controversial as they allow businesses to walk away from debts and contractual agreements after they have collapsed.
The Sun European deal, in which it bought 171 stores and saved 1,650 jobs, left 95 stores shuttered and some landlords unrecompensed.
The business owed £5m to HMRC but Sun European said these debts would be offset through VAT and PAYE income from the retailer.
A Dreams spokesman said: “Through the pre-pack administration we were able to safeguard the majority of jobs and stores in our organisation.
“Our customers and suppliers are of paramount importance. Sun European Partners recognise this and we have been working with them to protect as many of our stakeholders as possible.”