The discount chain's notice of intention to appoint administrators gives it 10 working days to sell all or part of the business. About 12,000 jobs and 600 stores are at stake. Gordon Brothers, the owner, wants to recover a roughly 30 million pound loan.
The clock is now running on a sale of Poundland.
A notice of intention to appoint administrators to the British discount retailer was filed on Thursday afternoon, according to court filings reported by PA Media. The notice gives it 10 working days of protection from creditors. AlixPartners is understood to be lined up as administrators. The stores are trading as normal. The chain employs about 12,000 people across about 600 stores.
Poundland has not entered administration. The notice is a step that buys time for a deal before administrators are appointed.
No buyer for the whole
Barry Williams, the managing director, said in a statement that the company had received no acceptable offer for the entire business. Several established retailers had made formal offers that "collectively ... cover a significant part of the business," he said.
Parties interested in parts of the chain include CDS Superstores, which owns The Range and Wilko, Fortress, which owns Poundstretcher, and Modella, which owns TG Jones. That points toward a pre-pack sale or a break-up across several buyers.
The owner's choice
The filing follows a public split between the owner and the board. Three independent directors appointed this month resigned after disagreeing with Gordon Brothers' rejection of a solvent offer from Martin Property Group, the BBC reported. Gordon Brothers wants to recover a shareholder loan of about 30 million pounds. Earlier this week, a letter from Williams to staff, first reported by The Times, said Gordon Brothers had restricted the company's access to funds.
That leaves an unusual sequence: an owner that turned down an offer to keep the company solvent, directors who left in protest, and a sale process that now runs through insolvency.
Recovery or break-up?
The case for the process: no acceptable offer for the whole business arrived, offers from established retailers cover a significant part of it, and the owner is seeking to recover money it lent the company.
The critics' case: a solvent route existed and was declined, three independent directors thought the rejection was wrong, and a break-up may cost more jobs and leave unsecured creditors with less.
What comes next
Appointment of administrators within the protection window, which ends around mid-November, any pre-pack or part sales and the number of stores and jobs they cover, and whether Martin Property Group returns with a revised bid.