Poundland administrators lined up as 12,000 jobs hang on a 10-working-day rescue window

Poundland has filed a notice of intention to bring in administrators, a step that puts the jobs of around 12,000 people in doubt and starts a ten-working-day countdown to find a rescue. Court filings show the notice was lodged on Thursday afternoon, and AlixPartners is understood to be the firm that will be appointed.

The notice creates a legal moratorium, shielding the discount chain from creditors while advisers try to land a deal. Poundland insists its stores, which number around 600 in the UK according to most reports, remain open and trading as normal. City AM put the footprint at 640 across the UK and Ireland.

Why Poundland administrators are being lined up

The immediate trigger was a failed sale. Poundland’s owner, the US firm Gordon Brothers, bought the business for a nominal £1 last year and launched a sale process in early September. Management named Irish property group Martin Property Group as its preferred bidder earlier this month, but Gordon Brothers rejected the offer.

Reports point to a dispute over a loan. Gordon Brothers is said to have wanted bidders to cover £30 million, and Martin Property Group declined to pay it, according to City AM’s sources. City AM adds that three new directors, brought in to speed up the sale, resigned this week over the owner’s refusal to accept the bid. In a memo to staff, managing director Barry Williams called the situation “unexpected, unwanted and wholly avoidable.”

Who might buy what

Poundland’s board says no acceptable offer emerged for the whole business, but several established retailers have made formal offers that together cover “a significant part” of it. Those named as interested in parts of the estate include CDS Superstores, which owns Wilko and The Range, Poundstretcher owner Fortress, and TG Jones owner Modella. Reports also name B&M and Lidl, with Aldi mentioned by one outlet and Iceland by another.

The catch is that a break-up is unlikely to save everything. Deals probably will not take in every shop, and some jobs are expected to go. City AM reports that bidders have committed to taking on staff at the stores they acquire under TUPE rules, which protect employees when a business changes hands. It also notes that a carve-up could mean the end of the Poundland brand.

Political and union pressure

The retail union Usdaw has been blunt. It called Gordon Brothers an “absolute disgrace” and said the owners’ failure to accept a solvent offer suggests they are content to let the company fall into administration, with 11,000 redundancies in the run-up to Christmas. National officer Bally Auluk urged the government to “take robust action.” City AM reports that business secretary Jonathan Reynolds has written to Gordon Brothers to establish the facts.

There is a local angle too. City AM notes that Poundland’s distribution centre in Makerfield is in the Prime Minister’s own constituency. Martin Property Group had promised to protect the site, but its future looks less certain if the retailer is split up.

What happens next

Gordon Brothers had overseen a turnaround programme that included closing more than 100 shops in the past year. That was not enough to settle the company’s finances or the argument over its ownership. Over the next two working weeks, the Poundland administrators-in-waiting will weigh offers, and the outcome will determine how many stores survive and how many of the roughly 12,000 staff keep their jobs.

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File photo: Fomer Wilko store in Chester became Poundland.jpg by Nabokov, CC0, via Wikimedia Commons.