High street discounter Poundland has filed to appoint administrators, threatening around 12,000 jobs across its roughly 600 UK stores. Court filings show the retailer filed a notice of intention to appoint administrators on Thursday afternoon, which gives the business 10 working days of breathing space from creditors to pursue a potential rescue deal. Poundland's managing director Barry Williams told staff in a memo that the situation is "unexpected, unwanted and wholly avoidable".
The board of Poundland Limited said that over the past two months, prompted by interest from several parties, it has been working on a formal sale process for the retailer. Despite what it described as "enormous efforts", the board said it has not been possible to identify an acceptable offer for the business as a whole. However, the process has attracted several established retail operators who have made formal offers that collectively cover a significant part of the business.
The board stated that filing the notice of intention creates an immediate ten working day legal moratorium during which it will work closely with advisers to identify and deliver the best possible outcome. The board appointed representatives of AlixPartners as administrators to oversee the insolvency process and assess offers to buy all or parts of the business. Stores remain open as normal, according to the statement.
The discount chain is entering insolvency after owner Gordon Brothers rejected a takeover offer from Irish real estate firm Martin Property Group, which management had named as their preferred bidder earlier this month. Gordon Brothers, which purchased Poundland last year for £1, launched a sale process for the retailer at the start of September. Wilko and The Range owner CDS Superstores, Poundsretcher owner Fortress and TG Jones owner Modella are understood to be interested in buying parts of the Poundland business.
Gordon Brothers had overseen a major turnaround programme at Poundland that included closing more than 100 shops over the past year in an effort to shore up its finances. For UK savers and investors, the insolvency highlights the challenges facing the retail sector during a difficult economic environment, with the outcome of the rescue process likely to affect consumer choice on the high street.