Was private equity to blame for Maplin's failure?

Maplin and Toys R Us have both gone bust on the same day, making comparisons inevitable.

Both companies are loss-making and had a terrible Christmas.

But the administrators at Maplin, PWC, seem much more optimistic of salvaging something than Moorfields do at Toys R Us.

Toys R Us has run up eye-popping debts with landlords, banks, suppliers and its pension schemes

Maplin’s debt burden is rather lower and its largest creditor is, curiously, Rutland Partners, its private-equity owner.

Rutland bought Maplin for £85 million three-and-a-half years ago and loaded the cost of the deal onto the business.

Rutland saddled Maplin with a giant loan and charged interest at an eye-popping 15% - it did so in the expectation the company would be able to make repayments. It couldn’t.

When Rutland bought Maplin is was narrowly profitable.

Toys R Us UK has gone into administration, putting over 3,000 jobs at risk. Credit: PA

The tax expert, Richard Murphy, believes the structure of the takeover raises serious questions: “The chance Maplin could ever pay a 15% return was remote in the extreme.

"The chance that it’s was over-stressed in an attempt to make such payments is highly likely.

"The result is employees losing their jobs and a valuable resource for many being lost to the high street.

"The time has come to question whether the venture capital business model adds value in the UK."

Rutland is Maplin’s biggest creditor - by some distance - it is owed well in excess of £90 million.

Finding a buyer for Maplin will depend on how much of that debt Rutland is prepared to write off.

The Maplin takeover has been a disaster for Rutland, it is facing colossal losses and will be wanting to clawback as much money as possible.

The question is whether Maplin is worth more restructured and sold on, or broken-up and its assets auctioned to the highest bidder?

The uncomfortable truth is Maplin may be worth more dead than alive.