Poundland has filed a notice of intention to appoint administrators, putting approximately 12,000 jobs at risk across its 600 UK stores. Court documents show the chain filed the notice on Thursday afternoon, granting the business 10 working days of protection from creditors while it seeks a potential rescue deal.
Advisers remain in discussions with parties who have expressed interest in acquiring the brand and a significant number of its stores. Poundland managing director Barry Williams said: "Despite enormous efforts it has not been possible to identify an acceptable offer for the business as a whole."
Sale process attracts interest
Williams added: "The process has however attracted several established retail operators who have made formal offers. Collectively these cover a significant part of the business, and we believe offer the best available prospects for shareholders, creditors and to preserve jobs."
He further stated that the retailer would be working closely alongside its advisers to "identify and deliver the best possible outcome". It is understood that corporate advisory firm AlixPartners is set to be appointed as administrators.
Stores remain open
Poundland has emphasised that all of its stores remain open and are continuing to trade as normal throughout the insolvency process. This follows owner Gordon Brothers rejecting a takeover bid from Irish real estate firm Martin Property Group, which management had named as their preferred bidder earlier this month.
Gordon Brothers, which acquired Poundland last year for £1, launched a sale process for the retailer at the beginning of September. Wilko and The Range owner CDS Superstores, Poundstretcher owner Fortress and TG Jones owner Modella are all understood to be interested in purchasing parts of the business. Other retailers including B&M, Lidl and Aldi are also reportedly keen on acquiring stores.
Jobs expected to be affected
However, deals are unlikely to encompass all Poundland stores and some jobs are expected to be affected. Gordon Brothers had overseen a significant turnaround programme at Poundland, which had already resulted in the company closing more than 100 shops over the past year in a bid to stabilise its finances.
The looming insolvency comes amid reports of growing tensions between Gordon Brothers and Poundland management. The owners rejected the solvent takeover bid from Martin partly due to expectations that bidders contribute £30 million to cover a loan Gordon Brothers took on from its acquisition last year. Williams informed staff in a memo earlier this week that the situation was "unexpected, unwanted and wholly avoidable".
