Key facts
- Gordon Brothers released roughly £10 million held on Poundland's balance sheet on Tuesday, Sky News reported.
- Industry sources called the release a vital step but said it does not guarantee Poundland avoids administration.
- A notice of intention to appoint administrators expires on Thursday, with AlixPartners lined up as administrator.
- Poundland has about 10,500 staff and 600 stores in the UK and Ireland, per Sky News.
- Martin Property Group remains interested in a deal; Xyra Group Holdings has been reported as frontrunner.
- Mark Newton-Jones was due before the business and trade select committee on Wednesday.
Gordon Brothers released roughly £10 million held on Poundland's balance sheet on Tuesday, Sky News reported, hours before the US investment firm's top UK executive was due to be questioned by MPs over its stewardship of the discount chain.
Industry sources told Sky News the release of funds was a vital step but cautioned it did not automatically mean Poundland would avert collapsing into administration as soon as this week. The move came after one of the solvent bidders for Poundland said resumption of supplier payments was essential to the prospects of a deal.
Martin Property Group is said to remain interested in a deal, while another bidder, Xyra Group Holdings, has been reported to be the frontrunner because it is offering to repay more of a £30 million shareholder loan up front.
A notice of intention to appoint administrators expires on Thursday, and Poundland's directors will be unable to seek an extension unless they are confident creditors' interests would not be compromised. If they cannot be satisfied, they would have no choice but to proceed with the appointment of AlixPartners as administrators.
The notice was filed after Gordon Brothers froze Poundland bosses' access to company funds after accusing them of breaching the terms of its asset-based lending facility, an accusation they are said to reject. Poundland has not placed any supplier orders for at least two weeks, meaning even the latest release of funding offers no guarantee of survival.
Gordon Brothers has rejected a number of going concern offers for Poundland on the basis that it would not receive adequate repayment of its share of a £30 million shareholder loan for which it paid just £1.
Mark Newton-Jones, Gordon Brothers' top UK executive, will appear before MPs on the business and trade select committee on Wednesday to explain the firm's conduct. Committee members are expected to grill him on the reasons for the sudden resignation of three Poundland directors just two weeks after their appointment, as well as Gordon Brothers' insistence that it is trying to salvage as many jobs as possible.
Poundland declined to comment, while Gordon Brothers could not be reached for comment.