POUNDSTRETCHER faces “no choice” but administration as the discount giant begs for a restructuring lifeline to save 300 shops.
The high street chain has warned it is staring down the barrel of collapse unless a bold new rescue plan is given the green light.
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Lawyers for the budget retailer told the High Court that the business will “likely have no choice” but to file for administration if the restructuring is blocked.
With nearly 300 stores and 3,000 workers across the UK, the stakes have never been higher for the firm which was snapped up by US investment giant Fortress just last year.
Despite the new ownership, the company is now locked in a race against time to plug a massive funding gap.
The court heard on Wednesday that the retailer faces “insufficient funds” to meet a £2.8million bill due in late June.
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That financial black hole is expected to balloon to £9.7million by the end of July if nothing is done to steady the ship.
Tom Smith KC, representing Poundstretcher, told the court in written submissions that if the plan fails, directors will be forced into insolvency.
He warned that in that scenario, administrators would likely only keep doors open for a short time to sell off remaining stock.
The retailer had already approached landlords in March to ask for rent cuts to secure its long-term future, though bosses insisted at the time that jobs and stores were safe.
Now, the company says the new restructuring is vital to restore “financial stability” and allow them to “implement the turnaround business plan.”
Mr Smith explained that the group’s performance has taken a battering since 2020.
He told the court that “the group’s performance has continued to deteriorate due to subdued customer confidence, rising operating costs and inflationary pressures.”
To survive, Poundstretcher wants to overhaul its shelves by “shifting the product mix of the plan company to include more well-known household brands.”
The survival strategy also involves “optimising the plan company’s store portfolio, by opening stores on a selective basis in locations with higher footfall.”
Mr Justice Hildyard has now given the go-ahead for the company to meet with its creditors on May 26 to vote on the deal.
If the creditors back the move, the plan will head back to the High Court on June 4 for a final signature from a judge that could save the discount king from the brink.
