Creditor protection expires 26 November if no buyer is found
Gordon Brothers, the US investment group that owns Poundland, has agreed to release £21m of £50m it had been accused of endangering the business by withholding, funding an emergency resupply of about 16m grocery items to 600 shops in the UK and Ireland over the weekend.
Senior Poundland staff codenamed the effort “Operation Gloria”, after the Gloria Gaynor song I Will Survive, which soundtracked a video the chain posted on social media showing pallets of Yorkshire Tea and Pot Noodles moving from depots to shelves.
The money is intended to provide breathing space while rescue talks continue, ensuring that suppliers keep sending goods to branches through the pre-Christmas trading period.
Poundland filed a notice of intention to appoint administrators at the end of last month, throwing the fate of its 12,000 staff and about 2,000 suppliers into uncertainty. Last week the chain won high court approval for an extension of legal protection from creditors, giving it until 26 November to find a buyer.
The company and Gordon Brothers are now heading for a period of talks with potential buyers and the business secretary, Jonathan Reynolds. Reynolds plans to meet Poundland and Gordon Brothers before the administration deadline runs out, according to a report by Sky News.
Reynolds and Andy Burnham have expressed concerns about Gordon Brothers’ conduct, and the prime minister has asked why the US company has yet to accept an offer for a business that employs 11,000 people.
Discussions could be affected by allegations — denied by Gordon Brothers — that the US investment group is more interested in protecting its own interests by breaking up the business, despite signs of a dramatic improvement in its trading performance.
MPs have accused Gordon Brothers of “predatory capitalism”. Liam Byrne, the chair of the business select committee, likened the group to “the wolf of Wall Street, on the British high street”.
Documents provided to MPs showed that Gordon Brothers had taken close to £20m in interest payments and various fees, including those relating to store closures, since acquiring Poundland. Gordon Brothers has denied freezing any funds that should have been available to Poundland and pointed to loans it has provided to prop up the company.
Gordon Brothers bought Poundland from the Polish retail group Pepco last year for a nominal £1, and says it rescued the company from collapse when nobody else would.
Poundland has said it is in discussions with three potential buyers. Bids from the investment groups Xyra Group Holdings and Innovest are understood to have relatively little chance of success.
Martin Property Group, a Northern Irish company, is Poundland’s preferred bidder, but progress has stalled over the repayment terms of a loan from Gordon Brothers. A number of high-street retailers, including Tesco, are understood to be eyeing some of Poundland’s shops.
The Guardian has approached Gordon Brothers, the business department and Poundland for comment.