Andy Burnham, the prime minister, has called on the US owner of Poundland to “sit down” with the government and find a way to save the discount chain’s stores, after the business filed a notice of intent to appoint administrators that puts up to 12,000 jobs at risk.
Gordon Brothers, the investment firm that bought Poundland for £1 last year, has come under political pressure this week. The filing covers a chain of about 600 stores across the UK and Ireland.
Burnham, whose Makerfield constituency is home to one of Poundland’s largest distribution centres, urged the owners to “focus on the people in your employment” and to come up with a “practical solution that saves jobs and saves those stores”. He argued that “many of them are viable propositions”.
Speaking in Antigua, where he is attending a meeting of Commonwealth leaders, he said: “They’re on high streets. They matter in our communities. There is a solution to be found here. Sit down with us and let’s find it.”
Jonathan Reynolds, the business secretary, met representatives of Gordon Brothers yesterday as the deadline to secure a rescue deal approaches.
A source close to Reynolds said he had made clear that “Gordon Brothers must do everything in their power to protect jobs and provide certainty for workers. He is pleased to have secured this commitment in the meeting and will continue to hold the company to account and closely monitor developments.”
Politicians have accused Gordon Brothers of behaving like a “predatory capitalist vulture” over its handling of the sale. Executives from the firm have been summoned to a public hearing of parliament’s business and trade committee to explain why it rejected a solvent takeover bid from Martin Property Group, the Irish real estate firm.
Poundland’s management had named Martin Property Group as its preferred bidder. The dispute between the owner and management centres on a £30m shareholder loan, which an analysis of the proposed sale found Martin Property Group was unwilling to repay upfront, Business Matters reported last week.
Martin Property Group’s proposal would have involved paying as little as £1 for Poundland’s equity, repaying the balance of existing loans and injecting millions of pounds to fund a turnaround, according to Sky News.
Gordon Brothers has said that “attention must now turn to other active bids”, adding that the sale process had surfaced formal and indicative offers for parts of the business from established retail operators.
The notice was lodged at the High Court last Thursday. It triggered a 10 working day moratorium that prevents creditors from calling in their debts, raising the likelihood that the retailer is broken up and sold in parts.
Under a moratorium of this kind, no legal process may be started or continued against the company without the consent of the administrator or the permission of the court, according to HMRC guidance, which states that the administrator’s appointment takes effect within 10 business days of the notice being filed.
Poundland’s board said at the time that it had filed the notice to appoint representatives of AlixPartners as administrators, and that its stores remained open as normal. Managing director Barry Williams told staff in a memo that the situation was “unexpected, unwanted and wholly avoidable”, Business Matters reported when the notice was filed.
Parties said to be interested in parts of Poundland’s estate include Tesco, Lidl, Iceland and Fortress Investment Group, which owns Poundstretcher. Fortress amended its offer last month to target between 200 and 250 of Poundland’s roughly 530 UK shops rather than the whole business, Sky News reported.
An analysis of the bids suggested many of the offers included provisions to transfer staff under TUPE. Government guidance on TUPE and insolvent businesses states that the regulations will normally apply where a business is rescued and taken over or transferred, but that employees are unlikely to be protected if it is closing down.
Some estimates have put potential job losses as high as 30,000 once the implications for Poundland’s supply chain are taken into account.
