Poundland has avoided an immediate collapse after a court extended a deadline to find a buyer by 10 days, the BBC reported. The previous deadline was due to expire at midnight. The discount chain has 11,000 employees and about 600 shops, and it had been edging toward administration after its owner, Gordon Brothers, blocked access to cash in the company's bank accounts.
A committee of MPs later questioned Gordon Brothers over accusations that the investment firm hoped to profit by selling the shops and stock piecemeal. Gordon Brothers bought the chain for £1 last year. It specialises in buying and restructuring distressed companies and has denied the claims. The BBC said about £50 million had been frozen, leaving Poundland unable to restock shelves, pay wages, and pay rent ahead of the Christmas trading period. Gordon Brothers later agreed to release a further £11 million from Poundland's accounts, on top of £10 million announced earlier, as it looks for a new buyer.
The firm said it was in talks with three parties for a sale of the whole business and had received "several offers from established high street retailers for significant parts of the business." After the parliamentary hearing, business and trade committee chairman Liam Byrne told the BBC he was "deeply concerned" and described the firm's behaviour as "much like a wolf on Wall Street, on the British High Street." "They refused to prioritise protecting jobs and stores over and above their own financial returns," he said. "It's clear that they've taken millions out of Poundland at a time when they themselves said the business was on a knife edge." The committee's message, Byrne said, was that Poundland should have "access to the funds that it needs to trade" at a critical time.
Poundland recorded a profit of £11 million in the year to September, which the BBC said was described as a "strong recovery" from losses of £68 million the previous year. Gordon Brothers has painted a bleaker picture, saying the chain remains "challenged and vulnerable to any potential downturn in future trading," and has argued that selling chunks of the 600 sites to other retailers may be the best way to secure jobs. The BBC said Poundstretcher, Tesco, and B&M have shown interest in some shops, which could mean continued employment at those sites. The open question is whether a piecemeal sale would protect more jobs than a buyer willing to keep Poundland as a national chain. The 10-day extension is more time, not a completed rescue.