Why comet went bust

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In a sign of the toughness of the market US giant Best Buy pulled out of the UK last year after struggling to gain a foothold. Industry sources said Comet faced a cash crunch after trade insurers cut credit lines to suppliers, forcing them to ask for payment for goods upfront. Deloitte is understood to be waiting in the wings to handle the administration of the stores, although they are expected to remain open for business in the meantime.

Comet's failure would be more bad news for a retail sector that has been hit by a series of collapses this year, including household names such as JJB Sports, Game, Peacocks and Blacks Leisure. Although the brands still survive, the subsequent restructurings have resulted in hundreds of store closures and thousands of job losses. Last month more than 2, jobs were lost at JJB alone after administrators were unable to find a buyer for the stricken sportswear chain.

The spate of collapses has contributed to the blight of empty shops on Britain's high streets, with a recent report from PwC and the Local Data Company calculating an average of 30 store closures a day in July and August. In the original sales document, OpCapita had promised to keep Comet going for 18 months and its rapid decline will attract scrutiny of its stewardship.

The Insolvency Service has launched a fact finding enquiry to look at the circumstances leading up to the chain's collapse. A spokeswoman for the Department of Business, Innovation and Skills said it would look at whether further action was required but said: "We are not in a position to comment further at this stage. To do so could prejudice the outcome of the investigation and any future action. A statement from OpCapita, the private equity firm that set up the company that owned Comet at the time of its collapse, said it would be happy to assist with the enquiry: "We will of course assist fully with any inquiry and welcome the opportunity to provide [the Department for Business and Skills] with factual information relating to the circumstances which led to Comet entering administration.

However, OpCapita failed to turn around Comet's fortunes, as the company continued to suffer from the fall in UK consumer spending during the recession and the big growth in online rivals. Towards the end, insurers refused to guarantee suppliers, who in turn refused to extend credit on sales to Comet in the run-up to the crucial Christmas sales period. Comet's demise is one of the biggest High Street casualties of recent years.

The store business, which at the time employed about 7, people, was founded in Hull in and began life selling batteries and radios.