By Basant El-Faramawy
MPs have urged the government to intervene and protect budget retailer Poundland and its 12,000 employees after the chain filed a notice of intention to appoint administrators last week. The move follows the decision by its US owner, restructuring specialist Gordon Brothers, to cease funding the business.
Government responds with talks and pressure
In an urgent question in the House of Commons, Labour MP Gareth Snell called for a message to be sent to Gordon Brothers that “predatory capitalism” would not be tolerated. Fellow Labour MP Antonia Bance asked for measures to hold the owner to account and a review of corporate governance and insolvency frameworks. Green Party MP Hannah Spencer described the situation as a scandal exposing the economy’s vulnerability to private equity firms.
Minister for the future of work Kate Dearden said officials held talks with Gordon Brothers on Monday and she would meet Poundland management and the shop workers’ union Usdaw on Wednesday. Business Secretary Jonathan Reynolds is also expected to meet Gordon Brothers later this week. Liam Byrne, chair of the business select committee, has summoned the owner to answer questions next week.
Potential buyers and funding gap
Gordon Brothers is understood to be in talks with at least two potential buyers for the whole company. Northern Ireland’s Martin Property Group has made a fully funded offer of about £15 million, half payable immediately. Another offer from investment group Innovest, advised by former Reform candidate Charles Bunker, is believed to have partial funding. However, Gordon Brothers is reportedly unwilling to accept Martin Property’s offer because it falls short of repaying a £30 million shareholder loan.
Gordon Brothers defends its record
In a letter to the government, Gordon Brothers executive Mark Newton-Jones said the firm had provided £85 million in additional financing since acquiring Poundland for £1 last year and had returned the chain to underlying profit. The letter cited rising inflation, increasing staffing costs and severe shoplifting as challenges preventing sustainable cash generation.
Political pressure mounts
The prime minister’s spokesperson said Gordon Brothers needed to explain why it had not accepted any offer to keep the company going, adding that the owner did not appear to be acting in the best interests of staff and stores. Conservative business spokesperson Bradley Thomas blamed the government for creating a hostile economic landscape. Poundland founder Steve Smith warned that staff could be out of work for years if the chain collapses.
