Wilko’s administrators have defended the controversial role of Hilco, the vulture fund that swooped on the stricken discount retailer shortly before its collapse.

Hilco Capital loaned £40 million to Wilko and also acts as the liquidator of its stock, which has led to accusations of conflicts of interest.

Specialising in retail, Hilco has been on hand to help administrators with some of the UK’s most high-profile company failures, including at Woolworths, BHS and Debenhams.

It also owns DIY chain Homebase and the Denby pottery business after buying them when they ran into trading problems.

The business model has proved highly lucrative for the firm’s Belfast-born founder, Paul McGowan.

Hilco paid out dividends totalling £13.5 million in the past two years, most of which will have gone to him as the largest shareholder.

Wilko took the £40 million loan in January. That gave Hilco a seat at the top table of creditors and means the restructuring firm is likely get all its money back, unlike some others who are also owed large sums.

It is also in line to net chunky fees for advising administrator PricewaterhouseCoopers in valuing and selling off Wilko’s wares.

The GMB union, which represents some of the 12,500 workers facing redundancy, has raised concerns about a potential conflict of interest.

‘It’s clearly not right if a company owed money is also advising the administrators,’ said national officer Nadine Houghton. ‘In fact, it stinks.’

Hilco has a long history of making money from the High Street’s terminally ill and walking wounded.

The firm was set up by McGowan and former Harrods boss Paul Taylor in 2000 as the London arm of the US restructuring firm of the same name.

Homebase repaid a £132 million loan to a parent company ultimately owned by Hilco after receiving millions in state aid in the form of furlough money and business rates relief during the pandemic.

The DIY chain also handed more than £3 million in consultancy fees to Hilco firms, according to recent accounts. Hilco’s latest target is Superdry, the struggling fashion retailer. It has borrowed £25 million from Hilco – at the eye-watering rate of 10.5 per cent above the Bank of England base rate, currently 5.25 per cent. That means Superdry will pay almost 16 per cent interest on any cash it draws down.

The bumper paydays enjoyed by Hilco’s bosses contrast starkly with the uncertain future facing Wilko’s 12,500 staff and members of its pension fund, who risk losing some of their retirement benefits because the scheme has a £56 million hole.

As The Mail on Sunday recently revealed, the founding Wilkinson family paid themselves £77 million in dividends over the past decade – including a £3 million payment out of reserves last year as the loss-making chain headed towards the rocks.

But as Hilco’s dual role as lender and stock liquidator comes under more scrutiny, calls are growing for more regulation of the insolvency industry.

Last night PwC defended its role in hiring Hilco, saying its job was to get ‘the best outcome for creditors as a whole’.

‘Crucially, stock agents report to the administrators… we are responsible for all decision-making in pursuit of our statutory duties,’ it said.

Hilco was contacted for comment.

Markets are pricing in two more interest rate hikes this year in yet more misery for struggling mortgage borrowers.

The Bank of England raised rates by a widely expected 0.25 percentage points yesterday, with some observers thinking there might be another ‘shock and awe’ 0.5 per cent increase.

Traders are now pencilling in another 0.25 per cent rise in September and another in November or December, taking rates to 5.75 per cent. Analysts at Investec predicted a peak of 5.75 per cent this year.

But investment bank ING forecast 5.5 per cent, saying a second 0.25 per cent hike towards the end of the year would ‘largely depend’ on whether inflation in the services sector had slowed.

Yesterday’s increase was greeted with relief by the markets – avoiding a half-point rise provided a sign the central bank was less troubled by the outlook for inflation.

Sterling slipped following the announcement by the rate-setting Monetary Policy Committee (MPC), which voted six to three for the increase in rates to 5.25 per cent, their highest since 2008. 

Two dissenters backed a 0.5 per cent hike and one voted to leave rates at 5 per cent.

The pound initially dropped to a five-week low of around $1.262 against the dollar but recovered to around $1.265. 

On the bond markets, yields on UK gilts fell, meaning the Government is likely to find it cheaper to borrow.

The FTSE 100 ended the day down 0.4 per cent, or 32.47 points, at 7,529.16. But the more UK-focused FTSE 250, which is more exposed to the effects of higher interest rates, closed up 0.1 per cent, or 20.77 points, at 18,833.65.

Economists had been divided about how aggressive the Bank would be, with around a third having predicted a 0.5 per cent hike similar to the one in June.

But traders pared their bets on further rises following the emergence of the divided opinion among the members of the MPC.

‘The vote split indicated we are nearing the peak now,’ Luke Hickmore, an investment director at Abrdn said.

But the Bank warned interest rates could remain higher for longer as inflation, which was recorded at 7.9 per cent for June, was still well above its 2 per cent target.

The MPC said it would keep rates ‘sufficiently restrictive for sufficiently long’ to get inflation back down.

Matthew Ryan, head of market strategy at financial services firm Ebury, noted the Bank was ‘set to raise rates more aggressively than its peers,’ with the likes of the US Federal Reserve having paused their own rate rises.

‘UK rates could remain higher for longer than in most other major nations,’ Ryan said, adding this would help strengthen the value of the pound.

Looking further ahead, Paul Dales, the chief UK economist at Capital Economics, said that the next big surprise would be ‘how fast rates fall in late 2024 and 2025’, particularly if the mounting cost of borrowing triggered a recession.

While the Bank of England did not predict an economic downturn, Governor Andrew Bailey said that growth was still ‘pretty sluggish’ although he maintained that bringing down inflation was ‘going to be good for growth going forwards’.

The Bank cut its growth forecasts for next year and 2025.

For 2024, it expects UK gross domestic product (GDP) to grow 0.5 per cent, down from previous estimates of 0.75 per cent.