Poundland could avoid immediate collapse after its under-fire US owners told MPs they were in favour of extending a deadline to find a buyer.
Gordon Brothers, which had frozen £50m from Poundland’s accounts – meaning it could not pay suppliers or restock shelves – released £10m earlier this week and reportedly agreed yesterday to unfreeze another £9m.
It was feared that Poundland could enter administration this week after Gordon Brothers rejected a rescue bid from its management team, backed by Ireland-based Martin Property Group, which would have saved its nearly 12,000 staff and potentially also a wider supplier base of 18,000 people. Further approaches have also been rejected by the owners.
Should Poundland go under, the crisis could trigger a domino effect across the high street, according to an expert we spoke with last week.
Poundland filed a notice to appoint administrators, but the moratorium on creditors calling in debts was set to expire at midnight. According to reports, the additional £9m will give Poundland 10 further days’ breathing space.
On Wednesday Gordon Brothers’ UK lead appeared in front of Parliament’s Business Select Committee to answer questions on its efforts to find a solvent buyer. The company’s board then held an emergency meeting last night.
Gordon Brothers had justified freezing its access to company funds after accusing bosses of breaching the terms of its asset-based lending facility, and said the business “remains challenged and vulnerable”.
However MPs are said to be angered by Gordon Brothers’ refusal to accept any of three solvent bids to take over Poundland, as the chain has reported increases in sales and profitability.
Liam Byrne, chairman of the business and trade committee, told the BBC that that the firm’s behaviour as “much like a wolf on Wall Street, on the British High Street”.
Byrne said: “They refused to prioritise protecting jobs and stores over and above their own financial returns… [they should] do what is right to save jobs and stores and do that now.”
Gordon Brothers is said to favour breaking up the retailer and selling off its shops to other retailers including supermarkets and other discount chains.
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