The business secretary’s team has written to Gordon Brothers, the owner of Poundland, as reports on 28 October said directors were preparing to file a notice of intention to appoint administrators. The discount chain has about 600 shops and 12,000 staff, and its owner has rejected the only bid to buy the whole group as a going concern.
Gordon Brothers, the US investment firm, bought Poundland for £1 last year and took on about £30 million of debt in the deal, according to the Guardian, a single transaction covering the whole estate, unlike the brands in the UK franchise directory, where each shop has its own owner.
It is understood to want that sum recovered. Three independent directors appointed to oversee a sale have resigned amid unease over the move towards insolvency. The group includes the 50-shop Dealz chain in Ireland. By the morning of 29 October, the coverage reviewed had reported no confirmed filing or appointment.
Government asks for the facts
Business secretary Jonathan Reynolds has instructed his chief strategic business adviser, David Bickerton, to “establish the facts” about Poundland’s position, the Guardian reported, after the Financial Times first covered the move. The department has contacted Gordon Brothers but, it is understood, not Poundland’s management. A department spokesperson said it was a commercial process and a decision for the owners, and would not comment further.
The administration route
The Guardian and City AM reported that Gordon Brothers is poised to file a notice of intention to appoint AlixPartners as administrator, potentially on 28 October. The filing would give the company a 10-day moratorium on creditor demands while a solution is sought, protection that does not extend to a brand’s individual operators, whose position rests on the franchise agreement.
City AM noted that a filing would not mean total collapse, but that the rejection of the Martin Property Group bid makes a break-up more likely. A notice of intention is a step ahead of an appointment, not the appointment itself.
Notice of intention is not administration
A notice of intention to appoint administrators is a court filing that comes before an appointment. Administration, a pre-pack sale and a company voluntary arrangement are separate procedures, and none had been confirmed for Poundland in the coverage reviewed.
Bids and potential buyers
Martin Property Group’s bid is understood to be worth more than £15 million, with only part paid upfront, well short of the £30 million Gordon Brothers hopes to recover, the Guardian reported. Poundland’s leader Barry Williams told staff the rejection was “unexpected, unwanted and wholly avoidable”, in a letter first seen by The Times.
An improved bid has not been ruled out. The Guardian said up to eight parties could be interested in parts of the estate, while City AM named Lidl, Iceland, B&M, The Range and Poundstretcher. One industry source told the Guardian that up to 500 shops could be left without a buyer.
What comes next
The signals to watch are a filed notice of intention, a formal appointment announcement, and any revised offer from Martin Property Group, which Gordon Brothers would reportedly discuss if the £30 million loan were paid upfront. Joanne Thomas, general secretary of the shopworkers’ union Usdaw, called on the government to do everything it can to save 11,000 jobs. Dealz in Ireland sits outside UK insolvency law, so any sale of it would follow a separate path.
