Poundland Files Notice to Appoint Administrators as Rescue Talks Continue

Poundland filed a notice of intention to appoint administrators at the High Court on 29 October. The notice is a formal step that gives a company time to look for a rescue, and the retailer's owner, Gordon Brothers, is still in talks with at least two possible buyers.

Poundland trades from more than 600 stores in the UK and Ireland and has 12,000 staff and about 2,000 suppliers. Gordon Brothers bought the 600-store chain for £1 last summer and holds a £30m shareholder loan in the business, according to The Guardian.

One possible buyer is Northern Ireland's Martin Property Group, whose offer has been backed by Poundland's management team. Gordon Brothers is understood to prefer breaking up the business instead, by selling off stock and selling stores to other retailers, including Tesco and the owner of Poundstretcher.

Suppliers are among those facing the greatest exposure. Karan Shah, a director of Universal Toiletries, said Gordon Brothers should not be allowed to maximise its own financial return at the expense of suppliers without exploring every alternative for a solvent deal, meaning one that keeps the business able to pay its debts. Universal Toiletries has worked with Poundland for about a decade but stopped supplying stock in recent weeks over payment concerns. The company faces about £1.5m in financial risk, including almost £700,000 in stock already delivered but not yet paid for.

Andrew Kay, chief operating officer of John Leisure, said the company would have to rehome more than a million products made for Poundland, many already manufactured and in transit for next spring.

Political pressure is also building. The UK government planned to press Poundland's owner over the retailer's future, Reuters reported. During a debate in the British parliament, Gordon Brothers was described as "private equity vultures", a term for investment firms that buy and restructure businesses. Gordon Brothers executives are due to meet business secretary Jonathan Reynolds on Wednesday, while Poundland's management team has a separate meeting with minister Kate Dearden and the shop workers' union Usdaw.