Cheap as chips chain Poundland given High Court approval for radical overhaul that will involve large scale job losses
Poundland has avoided collapse after a rescue deal was approved by the High Court today.
The bargain chain had asked a High Court judge for the go-ahead for an overhaul that will involve rents being slashed and the closures of dozens of stores and distribution centres.
The firm claimed that without approval, Poundland could run out of cash and be forced into administration by Friday this week.
Instead, the green light for the plan will release up to £60million of new funding to be injected to keep the retailer afloat.
Approving the restructure, Sir Alastair Norris said: “I am going to sanction the plan. I will give my reasons later.”
Poundland has already laid out plans to close 68 branches, with 11 branches to pull down the shutters for good this coming Sunday, and another store set to close in early September.
Owner private equity firm Gordon Brothers, which bought the struggling chain from Pepco Group for £1 in June, has vowed to pump £90million in total into the business in return.
Poundland managing director Barry Williams said: “Today’s decision is vitally important for Poundland, allowing us to stabilise the business, securing the future of hundreds of stores and thousands of jobs. We’d like to thank the Court, and the engagement of our creditors, throughout this process.
“Despite the opportunity this ruling provides, I’m extremely mindful of its consequences for our colleagues – especially those leaving us as we streamline our store estate, distribution network and support teams. We acknowledge the direct impact our plans have had on them and re-confirm our commitment to do all we can to support them.
“Nevertheless, our wider attention must now turn to getting Poundland back to growth. In the coming weeks we will focus on getting us back on track – revamping ranges, lowering prices and creating the simpler and more focused Poundland we know our customers are eager for us to deliver.”
Poundland’s barrier had previously told the High Court that if the restructure was not approved, its directors would likely place it into administration by Friday this week, when a loan to Pepco is due to be repaid.
In written submissions for the hearing in London, Tom Smith KC said that the retailer’s financial position had “significantly deteriorated during the last two years” and that it had “performed poorly in a difficult retail and economic environment”.
He said: “The latest liquidity forecast shows that the group will run out of cash in the week ending September 7 2025.”
Poundland, founded in Burton upon Trent, Staffordshire, in 1990, has approximately 14,700 staff members and operates around 800 stores.
Mr Smith said a “very significant amount of new money” would be injected into the company through the plan. He said: “The plan will release a further £60million of funding, and that is in addition to the £30 million that has already gone in following the purchase that took place on June 12. So, in effect, if you add everything up, Gordon Brothers is putting in £90million.”
As well as the store closures, which would put around 1,000 jobs at risk, Poundland also said it would close its frozen and digital distribution site at Darton, South Yorkshire, later this year and another warehouse at Springvale in Bilston, West Midlands, early next year.
A further 350 people will be affected by the warehouse closures, which are linked to the company’s plan to stop online sales through its Poundland.co.uk website.
Poundland first appeared at the High Court in July at what is known as a “convening hearing”, where barristers asked for a judge’s permission to convene “plan meetings” of its creditors to vote on the restructuring plan. Following the meetings earlier this month, barristers are now asking a judge to rubber-stamp the plans at what is known as a “sanctioning hearing”.
It came as Poundland confirmed the locations of a further 12 stores that will close under its restructuring and recovery plan, including 11 this Sunday.
Poundland closures this week
- Blackburn
- Cookstown, Northern Ireland
- Erdington, Birmingham
- Kimberley, Nottingham
- Horsham , Sussex
- Hull
- Kettering, Northants
- Omagh, Northern Ireland
- Shepherds Bush, London
- Southport, Merseyside
- Taunton, Somerset
Poundland also announced its store in Irvine, Scotland, will shut on September 14.
The following stores have already closed:
- Ammanford, Wales
- Birmingham Fort Shopping Park, West Midlands
- Cardiff, Wales
- Cramlington, Northumberland
- Leicester, Leicestershire
- Long Eaton, Nottinghamshire
- Port Glasgow, Scotland
- Seaham, County Durham
- Shrewsbury, Shropshire
- Tunbridge Wells, Kent
- Bedford, Bedfordshire
- Bidston Moss, Merseyside
- Broxburn, Scotland
- Craigavon, Northern Ireland
- Dartmouth, Devon
- East Dulwich, Greater London
- Falmouth, Cornwall
- Hull St Andrew retail park, East Yorkshire
- Newtownabbey, Northern Ireland
- Perth, Scotland
- Poole, Dorset
- Sunderland Pallion retail park, Tyne and Wear
- Stafford, Staffordshire
- Thornaby, North Yorkshire
- Worcester, Worcestershire
- Brigg, North Lincolnshire
- Canterbury, Kent
- Coventry Hertford Street, West Midlands
- Newcastle Killingworth Centre, Tyne and Wear
- Kings Heath, West Midlands
- Peterborough Orton Gate shopping centre, Cambridgeshire
- Peterlee, County Durham
- Rainham, Kent
- Salford, Greater Manchester
- Sheldon, West Midlands
- Wells, Somerset
- Whitechapel, Greater London
- Swiss Cottage, Greater London
- Southampton West Quay, Hampshire
- Chiswick, Greater London
Poundland said it will shut down 16 more stores but has not yet identified their locations. It is understood that the closure dates for these are likely to be announced later in the year, when store workers will be informed.