The Original Factory Shop’s debts revealed ahead of Garstang store closure
The Original Factory Shop, a well-known UK discount chain, entered administration earlier this year.
Details surrounding the difficulties which led to the administration of the The Original Factory Shop have been revealed.
The Factory Shop Ltd, trading as The Original Factory Shop, was established in 1969 and operates as a UK-wide discount department store chain.
The well-known retail brand went into administration in January after owners Modella Capital said “last-ditch” measures to rescue the high street favourites had fallen through.
Last year, the brand – which had a now-closed outlet at Lancaster Leisure Park and a soon-to-close store in Garstang – underwent restructuring amid fears over its future, with investment firm Modella Capital stepping in to save it. But in January this year, Modella said it had made the “tough decision” to kickstart insolvency proceedings for the business.
Now, further details regarding the retailer's insolvency have been revealed, reports our sister publication Insider.
According to an estimate included in a new report by administrators Interpath, The Original Factory Shop owed more than £30m to unsecured trade and expense creditors.
At the date of the joint administrators' appointment in January, the North West-headquartered company operated 137 stores across the UK, offering a broad range of branded and own-sourced products, including clothing, homewares, beauty items, toys and seasonal goods at discount prices.
In the report prepared by Interpath, the total unsecured creditor balance as at the date of appointment stood at £114m, based on figures provided by the company's directors.
That figure incorporates about £31m owed to trade and expense creditors, including £12.6m to trade creditors, £10.7m of landlord claims and £79m to connected companies. The administrators said they continue to receive proof of debt forms from unsecured creditors.
Based on current estimates, it is unlikely that there will be a dividend to unsecured creditors, other than by virtue of the Prescribed Part, a mechanism which ring fences cash that must be made available to unsecured creditors and is estimated at £313,897 in this instance.
It is expected that there will be a distribution to secured creditors but the administrators are not yet able to confirm the quantum and timing of any potential distributions.
Secondary preferential claims total £2.9m at the time of the report. These creditors should receive a dividend, but the level of return is not yet known.
Having been owned by Duke Street for 17 years, The Factory Shop Ltd was sold in February 2025 to Modella Acquisition Co 7 Ltd, following a formal sale process as it faced financial distress.
The financial performance of the business following that deal prompted the shareholder to explore restructuring options and Interpath were engaged shortly after the completion of the sale to undertake a review.
Management subsqequently concluded that a CVA was the best course of action and this was approved by more than 90 per cent of creditors.
However, the report reveals that despite the efforts of its management team to drive the turnaround plan, The Original Factory Shop experienced significant supply and distribution issues following the CVA.
Although operational performance stabilised later in 2025, the business continued to trade at a loss through the key Christmas trading period.
Resulting liquidity pressures led to a build-up of creditor pressure and the directors therefore took the decision to file a notice of intention to appoint administrators on 5 January 2026.
Richard Harrison and James Clark of Interpath were appointed as joint administrators of The Factory Shop Ltd, trading as The Original Factory Shop on January 28, 2026.
Throughout the trading period, the joint administrators have continued to explore options for a sale of the business and/or certain of its assets, with continued engagement from multiple interested parties.
Store performance is being monitored on an ongoing basis, along with the viability of continued trade, with phased closures implemented where trading is no longer viable.
Trading operations have been supported by the purchase of selected stock from key suppliers and the support of more than 25 concession partners, who continue to provide stock to stores on an ongoing basis to support trading.
Alongside the trading strategy, the joint administrators continue to run a formal sales process for the business and its assets with the objective of achieving the best possible outcome for creditors.
As of February 20, 1,109 employees remained employed by the company in administration. But, multiple stores are set to close in the coming weeks.
The Garstang store is set to close on March 29, it was revealed last week.
A spokesperson for The Original Factory Shop Garstang said on Facebook: “Sadly today we have been given the details on a closure day. Sunday March 29 will be our last day.
“There are still lots of bargains in store and please remember that we do not set the prices and can not do deals to make things cheaper.