BrightHouse has put Grant Thornton on standby to handle a potential administration.

Sky News reported that the rent-to-own retailer recorded a surge in customer compensation claims, which has put it close to insolvency – risking around 2,400 jobs across its 250 stores.

BrightHouse went through a restructuring back in 2017, after the Financial Conduct Authority demanded it repay nearly 250,000 customers for failing to act as a responsible lender.

Advisers from EY and Freshfields Bruckhaus Deringer have recently been working with Grant Thornton to consider different options for BrightHouse, which has stated it requires the support of its stakeholders to survive.

One of the options apparently being considered is a scheme of arrangement to deal with mis-selling claims, which are costing around £1 million each month.

“We have disclosed a contingent liability with respect to the uncertainty around the future volume of claims and the potential outcome of the test cases under discussion with FoS [Financial Ombudsman Scheme],” read a statement. “The level of redress claims from customers is putting increasing pressure on the available liquidity in the group.”

Last month, the retailer reported a £16 million loss in the last quarter, due to rising compensation claims.

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