Cable gets involved as Comet closes its doors

It is the last day of trading for Comet, the forty or so stores still open will shut their doors for the final time tonight. Yet that might not be the end of the story. The Business Department has just confirmed to me that Vince Cable has called an investigation into what went on, trying to work out not just why the firm ended up going out of business, but the circumstances around the purchase of the company by a private equity firm last year.

There is so little money left in the pickings of Comet that the taxpayer, as an unsecured creditor, may end up having to shell out up to £50 million to cover redundancy costs and unpaid tax to HMRC.

Meanwhile the private equity firm, OpCapita that bought the company last year for one pound, will walk away with reportedly up to £50 million. The 6,985 staff on the other hand will be left with the bare minimum redundancy pay. Now, the Business Secretary wants to get to the bottom of what went on.

It is well worth saying that he would be unlikely to get involved in one of the many private equity deals that have worked out, many have proved an effective way of getting new management and investment into struggling businesses. But no one would suggest that the Comet affair has been a good example. The Business department will now investigate not just what went wrong and why the business ended up going under, but the circumstances around the acquisition of the firm itself.

What happened certainly appears to be entirely legal, but government sources suggest that does not make it right. Dr Cable has previously reflected on problems with the law around insolvency. The Comet case could, potentially, contribute to a change in the law. The Business department may give more details on their plans later today.