Poundland has applied for a second notice of intention (NOI) to appoint administrators, extending its protection from creditors for a further 10 working days and giving hope to its more than 10,000 workers.
The discount retailer's first NOI expired on Thursday. The new application gives the chain extra time to secure a rescue deal, with bosses confirming that funding has been agreed so shops can stay open and continue trading during this period.
Poundland operates around 600 stores across the country.
Funding and Trading Concerns
The move follows a private appearance by Poundland's US owner Gordon Brothers before MPs on the Business, Innovation, Science and Trade Committee on Wednesday. The firm was represented by Mark Newton Jones, the former Mothercare boss who now runs Gordon Brothers' operations in Europe.
Gordon Brothers bought Poundland a year ago for just £1, but reports claim the chain's management was forced to prepare for administration after being starved of funding by the owner.
The Mirror understands Poundland's management has been thwarted by not being able to use funds in its own accounts. The chain is believed to have taken roughly £30 million in sales last week alone, with takings up year-on-year.
Supply Chain and Shelf Gaps
The notice of intention to appoint administrators has already seen deliveries from suppliers dry up. Stock levels were high ahead of the Christmas rush, but it is understood gaps could now begin to appear on shelves.
Poundland's board said: "Amid an ongoing sale process, and with funding agreed to enable the business to continue trading during this period, the board of Poundland has today resolved to make an application for a second NOI with a view to identifying the best available prospects for shareholders, creditors and our people.
"This extends the current protections over the business for a further 10 working days. Our stores remain open as usual during this period and we thank our colleagues, suppliers and customers for their incredible and continued support."
Political and Economic Impact
Labour MP Liam Byrne, chair of the Business Committee, said after Wednesday's meeting: "I’m deeply concerned that Gordon Brothers behaviour may have jeopardised thousands of jobs on Britain’s high streets.
"Over the last 17 months, they have taken millions out of Poundland when the business was on a ‘knife edge’. Now Poundland appears to be on the rebound, there’s concerning signs it’s been strangled of access to its own funds in what should be its busiest trading period in the run up to Christmas. Worse, Gordon Brothers refused to say it will prioritise saving jobs over and above its own financial returns.
"The prospect of a good outcome however is now higher thanks to the focus on the business of the last week. But Gordon Brothers now needs to do the right thing: give Poundland the access it needs to its own funds, and work as hard as possible for a future that protects the maximum number of jobs and stores."
