Poundland looks set to avoid immediate collapse after its US owners told MPs on Wednesday they were in favour of extending a deadline to find a rescue deal, according to BBC News.
Gordon Brothers Blocks Discount Chain from Accessing Bank Cash
The discount chain, which employs 11,000 workers, has been edging towards administration after being blocked by investment firm Gordon Brothers from accessing cash in its bank accounts. Gordon Brothers bought the 600-store chain for just £1 last summer. The investment firm has denied claims that it forced an insolvency outcome to sell off stores and stock piecemeal.
The situation drew intense political scrutiny, prompting Andy Burnham to call for answers. Following a meeting between MPs on the committee and representatives of Gordon Brothers, Liam Byrne voiced strong criticism.
They refused to prioritise, protecting jobs and stores over and above their own financial interests.
Byrne also described the firm’s behavior much like a wolf on Wall Street, on the British High Street.
Funding Release Extends Rescue Talks
Sources close to the situation told the BBC that more time is expected to be given for a rescue deal, aided by the release of £10m in funding by Gordon Brothers.
While described as small in the scale of things, this release could help postpone collapse while a longer-term solution is explored. A 10-day moratorium protecting Poundland from its creditors expires on Thursday, but the deadline can be extended if there is a prospect of a solvent deal.
Views on the chain’s performance differ between operators and owners. Poundland chief executive Barry Williams told staff that like-for-like sales were up 11.4%. In contrast, Gordon Brothers painted a different picture, calling the chain challenged and vulnerable to downturns.
Interest in picking up Poundland stores has emerged from Poundstretcher, Tesco and B&M, while Gordon Brothers has remained in talks with Martin Property Group regarding a potential rescue deal and received an offer from Xyra Group Holdings, a London investment firm.
Earlier coverage: Poundland Seeks Rescue Deal to Delay Impending Collapse
