Phones 4U Debtor EE Targeted By Administrator

Administrators to Phones 4U, the high street retailer which collapsed last year, are inching towards launching legal action against third party debtors including the UK's biggest mobile phone group.

Sky News has learnt that PricewaterhouseCoopers (PwC) has issued a series of so-called "letters before action', setting out the obligations of debtors to repay money owed to a company prior to its collapse.

Sources familiar with the matter said that EE, the mobile phone network, was among the parties to have been contacted by PwC in relation to an undisclosed financial liability.

The move comes despite the fact that EE was itself forced to take a £336m charge in connection with the demise of the UK's second-biggest mobile phone retailer.

That writedown was triggered by the need to book costs immediately which would otherwise have been spread over a longer period.

In its most recent results, EE said: "The administration of Phones 4U resulted in the accelerated recognition, with no impact on cash, of £336m upfront customer investment costs that would have otherwise been recognised over the next five years."

It is unclear whether formal legal action will be pursued by PwC, or how long debtors have been given to repay the outstanding sums.

In an update to creditors last month, PwC said: "At the date of our appointment there were £21.1m of other book debts showing as due to P4U.

"These debts were largely in relation to retrospective discounts on stock purchases and various marketing agreements that were in place with suppliers pre-administration.

"Since our appointment we have been working to understand these debtor balances and the various set-off and other legal issues that surround these.

"We continue to progress individual strategies for the remaining cases in order to maximise realisations."

Phones 4U fell into administration in September after EE, the chain's last remaining network partner, informed it that it would not be renewing their distribution agreement.

Bondholders owed hundreds of millions of pounds were furious at the nature of the collapse, arguing that administrators should have been called in earlier in order to conserve cash, while John Caudwell, Phones 4U's founder, accused the mobile networks of "ruthless" behaviour.

After PwC's appointment, Vodafone, EE and Dixons Carphone (LSE: DC.L - news) struck deals to acquire various Phones 4U assets, preserving more than 2,000 jobs, but close to 3,000 employees have been made redundant and several hundred shops have been closed.

In November, the law firm Quinn Emanuel Urquhart and Sullivan was appointed to examine the conduct of the company's former directors and of the two mobile phone networks - Vodafone and EE - which severed their ties with Phones 4U in the weeks leading to its demise.

PwC declined to comment on the issuance of the letters before action, while EE also declined to comment.