UPDATE 1-UK retailer Comet close to administration-source
* Comet to go into administration next week - spokesman
* Comet files notice to appoint administrators
* Comet demise comes 9 months after Darty sold firm to OpCapita
* Dixons shares up 13 pct, Home Retail shares up 4 pct
By James Davey
LONDON, Nov 1 (Reuters) - British electricals retailer Comet is set to enter into administration next week, the latest household name to fall by the wayside in the consumer downturn.
Directors of the struggling company, which employs 6,500 staff in 240 stores, filed a notice on Thursday to a British court, a spokesman confirmed on Thursday.
"Comet Group Limited can confirm that it has taken steps to seek the protection of the court with a view to the company entering into administration during week commencing Nov 5," the spokesman said.
"In the meantime the board is urgently working with its advisers to seek a solution to secure a viable future for the company," he said.
Deloitte has been lined up as the potential administrator, a separate source told Reuters.
The notice to appoint administrators is a legal move providing companies with an initial five working days breathing space to discuss any possible survival plans with their nominated administrator. That can be extended to 10 working days but formal administration usually follows.
Talks will likely focus on possible suitors for any parts of the business that can be sold.
Comet, which analysts estimate has a 6 percent UK market share, was acquired by private investment firm OpCapita for a nominal 2 pounds from Darty (then known as Kesa Electricals) in February, with Darty paying OpCapita a 50 million pounds ($81 million) dowry to take the loss-making business off its hands.
Comet ran into trouble as suppliers tightened their terms as the firm attempted to reach its peak stock requirement ahead of Christmas. Trading without the credit insurance that protects suppliers meant it had to pay cash up front for goods.
The company's anticipated collapse comes a month after British sporting goods retailer JJB Sports fell into administration with 2,200 staff made redundant.
A raft of other retailers have also fallen into administration this year, including Clinton Cards, Game Group, Peacocks and Aquascutum, as the double-dip recession took its toll, though they have re-emerged in some form.
Many British retailers are still finding the going tough as consumers hold back spending in the face of inflation, meagre wage increases and government austerity measures designed to cut record debt.
British retail sales picked up more than forecast in October, a survey showed on Tuesday. However, one published on Wednesday said UK consumer confidence fell to its lowest in six months in October, highlighting the fragility of Britain's recovery from recession.
The likely removal of Comet from the British retail scene could be positive for rivals Dixons Retail and Home Retail's Argos, whose shares rose 13 percent and 4 percent respectively, as well as the UK supermarkets such as Tesco.
"The imminent demise of Comet will leave Currys and PC World (both owned by Dixons) the masters of all they survey in out-of-town specialist electrical retailing, even though John Lewis, Amazon and Apple remain formidable competitors," said independent retail analyst Nick Bubb.
OpCapita and Deloitte both declined to comment.