MFI Administration Help

Furniture store MFI went into administration on 26 Nov 08 with thousands of people who’d spent £1,000s left waiting for delivery. This step-by-step guide on what the administration means and how to protect your cash if you were affected.

• What is administration?
• What happens to MFI?
• Paid with a credit card?
• Paid with a Visa Debit card?
• Paid another way?
• If you don't get a delivery or refund?
• If you've had a part fitted kitchen?
• How to keep up to date?

What is 'administration'?

A. This means insolvency practitioners have been called in to run the company, and get what cash they can for the creditors via selling or utilising its assets. In theory, a business can be kept running as a ‘going concern’, but this is unlikely in the long term, and was not possible in MFI's case.

In most cases the insolvency practitioners will simply collect the assets, try and sell what they can, and then distribute whatever cash remains to creditors. When the money is distributed there’s a priority of who gets the money, which usually works a bit like this:

• The Insolvency Practitioners (if they didn’t get paid they wouldn’t do the job in the first place).
• Any secured creditors (if they’ve borrowed money that's secured on property/assets).
• Any employees (redundancy pay).
• Everyone else's ranked equally, and gets a share (this includes customers, the Inland Revenue etc).

What does this mean for MFI?

A. While some stores' remained open for a few months, all are now closed and some consumers are still without an order or a refund. At the time of the administration in Nov 08 MFI made a statement on their website to say:

"In the event that certain orders are not fulfilled, it is the current intention of management to refund all cash/cheque and debit card depositors and allow credit card depositors to seek a refund from their credit card provider."

Sadly this has not all been possible, and a more recent announcement on its website has suggested that those paying by cash, cheque or non Visa debit card are unlikely to get any refund at all. It is also suggesting that BOTH credit and Visa debit card customers now pursue their financial provider for a refund.

What’s MoneySavingExpert’s view on this?

This is an interesting strategy; the administrator was effectively saying “we know that people are protected by credit cards” and thus not looking after them, which has since spread to Visa debit customers too. While the positive is banks and credit card companies can afford the refunds more than a company in administration, getting money back from financial providers' may take a bit of a fight.

For those who didn't pay on credit or Visa cards a promise of a refund was great at the time but actually just gave a false sense of security to many consumers, even though there was always the concern about whether there was enough cash to fund the refunds. Everyone should now check to see if they can speed up the system using the alternatives routes below to get their money back.

Furniture worth over £100 and paid by credit card?

A. For furniture that cost over £100, and you paid all, or even part of this, on a credit card, then your credit card company is equally liable under Section 75 of the Consumer Credit Act.

In other words, whatever the rights you'd have with a retailer/company, you have with the credit card company. So here you have a claim for non-delivery of goods. MFI is suggesting credit card customers try this anyway.

This is a legal protection that credit card companies have no choice about, as when you spend on a credit card, you're effectively entering into an arrangement to borrow (even if you pay off in full) so you get these rights. For full details on how to do this, including free template letters, read my Section 75 guide.

One problem you may have though, is MFI do itemise some products separately, such as kitchens, so you may have 10 x £90 units. Under the standard interpretations of section 75 this would NOT be covered. Yet these things have rarely been tested, and it is at the least arguable that a kitchen is a single item regardless of its itemisation.

The best thing to do is go for it, though be aware it may be a fight, and there is a chance you won’t win. If you have problems claiming from your credit card read the no refunds question.

Did you pay on a Visa Debit or Visa Credit Card?

A. Although MFI said it aimed to refund anyone who paid by debit card, this is now looking extremely unlikely. Yet if you paid with a Visa debit card, or Visa credit card for goods under £100, there is a further process you can try as well.

This is about taking advantage of the Visa Chargeback system, a mechanism to get your bank to ask for money back from MFI’s payment processing bank rather than MFI itself.

Unlike with credit cards, Chargeback isn't a legal protection, but a protection from Visa's own rules. It's effectively Visa's own refund system. It's designed so that if you pay for something and that order hasn't been adequately completed or is never received, or the order is illegitimate in some way, your bank can do a Chargeback from the bank that collected the payment.

Important: You must do this within 120 days

The rules state you must complain within 120 days of realising there’s a problem. This means it's very important to check the day you heard there was a problem, to ensure you start the Chargeback before the deadline date. For those that heard about the administration on 26 November 08 the deadline will be the 25 March 09.

If you did not try and start a Chargeback at the time, NOW is the time to start as there are potentially only a few days left. For full details on the Chargeback process, including free template letters, read my Section 75 guide.

Did you pay in any other way, eg cash or cheque?

A. As mentioned above, MFI said it hoped to refund those who have paid by cash, cheque or debit card but now thinks this won't be possible.

You can try asking for something similar to Visa Chargeback as described above, but it is much less likely to work. Usually, banks and building societies are not legally obliged to help, but sometimes they do.

Many of the techniques in this guide are tried and tested, because of the administration of a company called Farepak in Oct 06. If you have time, it's worth reading through some of the Farepak discussion, to see some of the Farepack victims' success stories, and how to coordinate your complaint. You could also report your MFI stories for others to learn from.

Alternatively read the question below.

What happens if you don’t get a delivery or refund?

A. If none of the mechanisms above work for you, to be within any chance of getting money back you’ll have to apply to the administrator for a refund, not MFI.

Any money left after paying the secured creditors and employees will be split between everyone else who's submitted a claim. Usually, there's only a small chance you’ll get any money back by doing this. If you do, it won't be very much, and it will take some time to be resolved. This is currently expected to be Oct 09.

To make your claim, you’ll need to contact MFI’s administrators. As the administration is still underway there still isn’t a process in place for this yet, but details will be added here when they do, or you can check on MFI’s website.

Help may be available from Wickes

Additionaly Wickes has launched what it calls a rescue package for affected MFI customers. Just take your receipt into a Wickes store and it’ll make sure you get the identical bathroom for the same price or match the price of your kitchen for one of a similar specification.

The offer is open to anyone with a receipt dated before 24 November but excludes web prices and installation and is not available online. Read the leaflet for full details (we've been told by the Wickes press office that the offer doesn't end on the 18 Dec though).

What if I’ve had a part fitted kitchen?

A. If your kitchen/home goods are half way through being fitted and you’ve been left in the lurch, you still have rights. Generally these are what I call the “Sad Fart” rights from the Sale of Goods Act 1979, that’s because they must be Satisfactory quality, As Described, Fit for purpose And last a Reasonable length of Time. For more details on your statutory shopping rights see the Consumer Rights guide.

If you’re only half way through then you should be owed recompense to get it finished under these rules. Yet ultimately if the administrators don’t agree to pay you, your compensation will simply be one of those in line as a creditor to the company and it's not that likely you’ll get your cash.

However it's here that the section 75 rules above really come into their own. That’s because you have exactly the same rights with a credit card as with the retailer, which includes a breach of your statutory rights as well as administration, so you can ask it for recompense along the same lines. If you bought on a debit card, it's also worth trying the chargeback procedures.

How to keep up-to-date on the MFI situation?

A. If any major changes happen, they will be included in the weekly MoneySaving e-mail (see below). It's also important to keep up to date on MFI’s website for more information.

However, the other resource is other MFI customers in the same boat, so please report any updates and information in the MFI help discussion in the forum.