Poundland owner extracted millions when chain was on ‘knife-edge’, MPs say

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Retailer’s management to seek two-week extension of legal protection from creditors in high courtMPs have accused the owner of Poundland of extracting millions of pounds from the…

Retailer’s management to seek two-week extension of legal protection from creditors in high court

MPs have accused the owner of Poundland of extracting millions of pounds from the budget retailer when it was on a “knife-edge” as it seeks extra time to secure a rescue deal.

The management of Poundland, which employs 12,000 people and operates 600 stores in the UK and Ireland, will seek a two-week extension of legal protection from creditors from the high court on Thursday morning.

The legal measure protects Poundland from the demands of creditors until Thursday morning while a solution to its problems is sought.

Directors of Poundland are now seeking a further 10 working days’ grace, which must be approved by the high court. That comes after Gordon Brothers, which is understood to be supportive of the extension, released £10m more in funds to help Poundland secure new stock and keep trading.

Without the legal protection in place, Poundland is likely to have to call in administrators; the advisory firm Alix Partners is already lined up.

The European head of Gordon Brothers, Mark Newton-Jones, gave evidence in private for almost two hours to the Commons business select committee on Wednesday afternoon after MPs called on the government to protect Poundland and other high street stores from “predatory capitalism” and asset-stripping last week.

Liam Byrne, the chair of the committee, said that after questioning Newton-Jones he was “deeply concerned that Gordon Brothers’ behaviour may have jeopardised thousands of jobs on Britain’s high streets”. He said: “Over the last 17 months, they have taken millions out of Poundland when the business was on a ‘knife-edge’. “Now Poundland appears to be on the rebound, there’s concerning signs it’s been strangled of access to its own funds in what should be its busiest trading period in the run-up to Christmas. “Worse, Gordon Brothers refused to say it will prioritise saving jobs over and above its own financial returns.”

The committee…

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