Poundland Gets 10 More Days to Secure a Rescue Deal

Poundland has avoided immediate collapse after a court granted the discount retailer an extra 10 days to find a buyer, extending a deadline that was set to expire at midnight, the BBC reported. The chain, which employs 11,000 people across 600 shops, had been edging toward administration after owner Gordon Brothers restricted its access to cash in company bank accounts, according to the BBC.

Gordon Brothers, an investment firm that specializes in buying and restructuring distressed companies, bought Poundland for £1 last year, the BBC reported. The firm has been accused of forcing a piecemeal sale of Poundland's shops and stock by limiting the cash available for restocking, wages and rent ahead of the Christmas trading period. Gordon Brothers has denied the claims.

Why did the cash freeze happen before Christmas

The BBC reported that Gordon Brothers had frozen about £50m, leaving Poundland bosses unable to restock shelves across its stores. The firm later agreed to release an additional £10m to £11m, on top of £11m announced earlier, as it works to find a new buyer, according to the BBC.

Who is negotiating to buy Poundland

Gordon Brothers said it is in talks with three parties over a sale of the entire business and has received "several offers from established high street retailers for significant parts of the business," the firm told the BBC. A prior takeover bid for the chain was rejected, prompting calls for answers from politicians including Prime Minister Andy Burnham, the BBC reported.

What did MPs tell Gordon Brothers

A parliamentary business and trade committee questioned Gordon Brothers representatives over the handling of Poundland's finances. Committee chairman Liam Byrne told the BBC he was "deeply concerned" and said the firm's conduct was "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," Byrne said, adding that Gordon Brothers had "taken millions out of Poundland at a time when they themselves said the business was on a knife edge."

Byrne said the committee's message was that Poundland needs "access to the funds that it needs to trade at what should be one of the busiest periods in the year," and urged the firm to "do what is right to save jobs and stores and do that now."

How is Poundland performing under current management

Poundland boss Williams told staff last week that like-for-like sales, which exclude new store openings, were up 11.4%, a figure that was £1.5m ahead of budget over the Halloween trading period, according to the BBC. Williams also said the business had posted a profit of £18.1m, the BBC reported.

Poundland by the numbers

• 11,000 employees across 600 shops, per the BBC
• £50m in cash frozen by Gordon Brothers, with £10m to £11m released on top of an earlier £11m
• Like-for-like sales up 11.4%, or £1.5m ahead of budget, around Halloween
• Profit of £18.1m, cited by Poundland's boss

The 10-day extension gives Poundland and Gordon Brothers additional runway to close a sale before the retailer's busiest trading weeks of the year, the BBC reported. Read the original BBC report for ongoing updates on the talks.