Poundland's directors convened an emergency board meeting on Wednesday evening to decide whether to extend a moratorium shielding the discount retailer from creditors, after its owner was accused by MPs of putting thousands of jobs at risk.
The retailer's directors, Barry Williams and Shaun Wills, met to consider triggering an extension to the creditor protection, which was due to expire within hours, sources told City AM. Poundland filed a notice of intention to appoint administrators last month, triggering a 10-day freeze on creditor action.
MPs question Gordon Brothers
The meeting followed a closed-doors session of Parliament's business select committee on Wednesday afternoon, where MPs grilled Gordon Brothers, the Boston-based investment firm that owns Poundland.
Liam Byrne MP, chair of the committee, said on Wednesday night: "After extensive cross examination this afternoon, I'm deeply concerned that Gordon Brothers behaviour may have jeopardised thousands of jobs on Britain's high streets." He added that Gordon Brothers refused to say it will prioritise saving jobs over its own financial returns.
During the two-hour interrogation, Gordon Brothers executive Newton-Jones informed MPs he would back a proposal to delay administrators, though the final decision lies with Williams and Wills. Sources indicated the retailer's directors were likely to consent to an extension.
Dispute over finances
Newton-Jones rejected claims that Gordon Brothers had limited Poundland's access to capital during the sale process, an allegation made by Steve Smith, the retailer's founder. The executive also stood by a pledge to safeguard the retailer's 12,000 workforce, though one MP challenged why he had not referenced employees until late in the proceedings.
Poundland's management told MPs that the investment firm had made it more difficult for the retailer to access funds for supplier payments, which Gordon Brothers disputes. The firm appeared to present a different assessment of Poundland's condition, with management suggesting the business had turned a corner and highlighting an anticipated £18m profit.
Gordon Brothers released £10m of capital to Poundland earlier this week, but Byrne said "there's concerning signs [Poundland has] been strangled of access to its own funds in what should be its busiest trading period in the run up to Christmas". Gordon Brothers claims it has made all funds available when requested.
Potential buyers and impact
Gordon Brothers is in discussions with NCP-owner Martin Property Group, investor Xyra Group and Irish investment firm Innovest Holdings regarding a solvent takeover, sources told City AM. Major retailers including Tesco, B&M, Lidl, Iceland, The Range and Poundstretcher are poised to acquire Poundland's stores and stock should the business fall into administration.
A collapse would represent the most significant retail failure in years and would deal a severe blow to Andy Burnham's ambitions to revive the high street. The Prime Minister and Chancellor have made bolstering Britain's retail sector a central plank of their agenda since coming to power in July.
Burnham said in September: "The truth is that too many high streets have been left to hollow out, leaving town centres a shell of what they once were. That must change." He had previously urged Gordon Brothers to safeguard as many jobs as possible, saying last month: "If there was a potential owner to avoid [collapse] that hasn't been accepted, then the business secretary and I want to know why that is the case."
