Mike Ashley is in hot water over the bizarre collapse of a retailer

Newcastle United and Sports Direct owner Mike AshleyGettyNewcastle United owner Mike Ashley (R) in discussion with managing director Lee Charnley prior to the Barclays Premier League match.

Larger than life sports tycoon Mike Ashley isn’t short of cash.

In fact, his Sports Direct firm is worth a whopping £4.3bn alone. That’s not to mention his personal wealth, tipped to be £3.75bn, according to the Sunday Times Rich List.

So its former employees and now Scottish politicians are scratching their heads over the complicated and bizarre collapse of a smaller retail unit, West Coast Capital USC, owned by the Newcastle United magnate.

There are a number of curiosities about USC falling into administration that staff and MPs have a problem with.

Ashley’s Sports Direct bought a majority stake in USC and its 90 stores in 2011, through two holding companies.

However, fashion label Diesel decided to sever its 15 year relationship with USC in 2014, after it issued a winding up order to try and get the store to cough up the cash it owed in debts.

Diesel’s claim was made on 15th December, according to court documents, and after a meeting with USC’s directors led by Sports Direct CEO Dave Forsey on 23rd December, it was confirmed that the unit would not be able to pay the outstanding debts to Diesel.

Now this is where politicians and staff have become confused about the collapse of USC.

Ashley’s Republic clothing chain, known as the “premium lifestyle arm,” bought USC out of administration.

Meanwhile, administrators Duff & Phelps was forced to accept Republic’s offer as Ashley’s speedy purchase would mean that most of USC could remain trading, due to his intimate knowledge of the business.

Politicians are now asking Ashley to appear in front of the Scottish Affairs Committee to answer questions over the complex nature of the collapse, which resulted in axing of 200-Ayrshire based warehouse jobs.

Ashley is yet to reply to the formal request but lawmakers are able to summon him to appear should he decline it.

Elsewhere, more details have emerged around the alleged breach workers’ rights at USC, following the closure of 28 stores.

Some are looking to take legal action because they were apparently not given the standard 90-day consultation period when a worker’s job is in jeopardy.

According to several reports, workers were given just 15 minutes notice before being let go.

Scotland’s Daily Record revealed that Duff & Phelps gave staff a letter on 14th January telling them that their jobs were at risk and that a consolation period had started.

However, the consultation period didn’t last very long as apparently a second letter was sent on the same day, telling the employees that their time at USC had been terminated.

The latest report from the Daily Record shockingly claims that despite the small notice period given to workers, USC new about its potential to fall into administration two months prior to the axing of staff.

Citing a Duff & Phelps report, the paper claims the firm met a secured creditor of USC on 14 November last year, while a representative of joint administrators the Gallagher Partnership then met USC on 17th December.

“It is bizarre and amazing that Duff & Phelps and Gallagher’s were involved at this early stage yet the workers were not told,” says Central Ayrshire MP Brian Donohoe in a press statement.

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