A specialist in litigation and dispute resolution has warned that Poundland could ultimately wind up in insolvency proceedings despite its rescue deal.
Poundland narrowly avoided administration after the High Court approved a major restructuring plan, but the discount chain has confirmed several stores across the country – as well as its online store and customer loyalty app – will be shut down as part of the shake-up.
The rescue package will inject up to £60m into the retailer, alongside a new £30m overdraft facility and extended loan repayment deadlines.
It comes just days before the business was set to run out of cash and was set to be placed into administration, and also follows the closure of dozens of its UK stores in recent months.
The Burton-on-Trent-founded company employs around 14,700 people across 800 stores and, while the ruling secures the majority of jobs and outlets, the company is pressing ahead with plans to close 68 shops, two distribution sites and end online sales through Poundland.co.uk from September 16th.
Its Poundland Perks loyalty app will also be retired on the same date, with vouchers remaining valid until January 2026.
Just this month, the retailer has closed 37 stores and another 11 are set to close on Sunday. Further store closures are set for September 14th.
Its frozen and digital distribution site in South Yorkshire will also fall victim to the restructuring later this year and another West Midlands warehouse will close early in 2026 in a move that could affect another 350 jobs.
Barry Williams, Poundland managing director, said the court ruling was “vitally important for Poundland, allowing us to stabilise the business, securing the future of hundreds of stores and thousands of jobs”.
However Nick Stockley (pictured), partner at law firm Mayo Wynne Baxter, said it is likely this court ruling will simply delay an inevitable eventual insolvency.
He added that Poundland needs a significant revamp, a possible rebrand and an effective business overhaul if it wants to avoid the fate of Claire’s Accessories.
“The position with Poundland is similar to River Island in that they have convinced the court the business can survive with time for a restructure to work,” he said.
“The fact that the application was unopposed will have helped the court make this decision in favour of Poundland.
“This is another example of the recent trend of restructure plans that bind creditors if the court agrees that the plan has some prospect of success. However it is likely this court ruling will simply delay an inevitable eventual insolvency.
“If Poundland was going to run out of cash on 7th September 2025, there appears to be an inherent problem with the business rather than a cashflow issue. Poundland’s counsel at the hearing said as much. Poundland will now operate on a significantly reduced level, many stores will close and jobs will be lost.
“Poundland has bought itself some time to restructure a failing business model, but it will remain a challenge to keep going long-term.
“It will need to do more with the business than make superficial changes and short-term fixes.
“It needs a significant revamp, a possible rebrand and an effective business overhaul if it wants to avoid the fate of Claire’s Accessories.”