Poundworld is poised to announce its intention to appoint administrators, putting around 5,300 jobs at risk, reports claim.
It is understood that the discount chain is low on cash and is filing the notice because it will give the business protection from its creditors for up to two weeks.
Today’s announcement comes as Britain’s high street faces a crisis amid an onslaught from online rivals – and came on the same day that House of Fraser announced 6,000 of its employees are at risk of losing their jobs as it plans to close more than half of its stores in a bid to save the company.
Sources told the Press Association that the planned notice will give Poundworld time to structure a pre-pack administration deal with private equity firm R Capital, former owner of Little Chef.
Yesterday it was reported that the founder of Poundworld was putting together a rescue package to prevent its collapse after a potential buyer walked away from rescue talks.
Chris Edwards built the chain from a market stall and is understood to be mulling a bid to buy it back from private equity owner TPG Capital.
Poundworld had previously rejected offers to sell through a pre-pack but all options are now being considered.
Management has so far failed to sell the retailer as a solvent business, after turnaround specialists Alteri Investors walked away from sales talks this week.
Deloitte has been preparing contingency plans for an administration in the event of talks collapsing.
Poundworld’s losses widened in 2016-17 to £17.1 million, from £5.4 million of losses the year before. The retailer was hit with a £5.7 million charge for onerous leases, a provision retailers make when the cost of a lease is no longer covered by the income of the store.
Edwards, 67, founded Poundworld in 1974 and he and his family pocketed millions when it was sold to TPG in 2015 for £150m. Poundworld losses in 2016/17 were £17.1m.
Several retailers have shown significant financial distress this year, with both Maplin and Toys R Us disappearing from the high street.
