Discount retailer faces administration by Friday as £276.5 million debt repayment looms with 14,700 jobs hanging in balance
Poundland will run out of money by 7 September if the High Court does not approve a crucial restructuring plan, barristers warned at a hearing on Tuesday, with the discount retailer facing potential administration by Friday.
The company, which employs approximately 14,700 staff members across around 800 stores, is asking a judge to sanction a rescue scheme that would push back £276.5 million in loan repayments due on 1 September by three years and secure vital new funding.
Tom Smith KC, representing Poundland Limited at the Rolls Building in London, told the court in written submissions that the retailer’s financial position had “significantly deteriorated during the last two years” after performing poorly in a difficult retail and economic environment.
“The latest liquidity forecast shows that the group will run out of cash in the week ending September 7 2025,” Mr Smith stated, adding that if the restructure was not approved, the company’s directors would likely place it into administration by Friday.
The hearing represents the final stage of a restructuring process that began when Poundland was sold by Polish parent company Pepco Group to US private equity firm Gordon Brothers for a nominal £1 in June. The sale followed years of declining performance at the British discount chain, which recorded a pre-tax loss of around £35.7 million in the 2024 financial year.
Under the proposed restructuring plan, Gordon Brothers would inject £90 million into the business – £30 million already invested following the June acquisition, plus an additional £60 million to be released through the plan. The scheme would also provide Poundland with a £30 million overdraft facility and reduce rents across many of its stores.
“The plan will release a further £60 million of funding, and that is in addition to the £30 million that has already gone in following the purchase that took place on June 12,” Mr Smith told the court. “So, in effect, if you add everything up, Gordon Brothers is putting in £90 million.”
Founded in Burton upon Trent, Staffordshire, in 1990, Poundland became a fixture of British high streets by offering products at a single £1 price point, though it abandoned this model in 2019. The chain has struggled in recent years amid intense competition from other discount retailers and rising costs.
The restructuring plan includes the closure of 68 stores, announced in June, which would put around 1,000 jobs at risk. The company also plans to shut its frozen and digital distribution site at Darton, South Yorkshire, later this year and another warehouse at Springvale in Bilston, West Midlands, early next year. A further 350 people will be affected by the warehouse closures.
As part of the turnaround strategy, Poundland will cease online sales through its Poundland.co.uk website, remove frozen food from stores, and retire its Perks loyalty app, which only launched across the UK last year.
Mr Smith told the court that many of Poundland’s stores “are unprofitable at their current rents”, with the company paying “higher than market rates for a significant number” of its sites. The restructuring would see rents reduced across the estate.
The hearing follows what is known as a “convening hearing” in July, where the High Court granted permission for Poundland to hold meetings with its creditors to vote on the restructuring plan. Creditors failed to fully back the proposals earlier this month, meaning the final decision now rests with the judge at Tuesday’s “sanctioning hearing”.
Pepco Group had owned Poundland since 2016 but put the chain up for sale earlier this year following continued sales decline. In the first quarter of 2025, revenues dropped by 10.3 per cent to €347 million (approximately £293 million), with like-for-like sales down 7.1 per cent.
The Polish parent company warned in March that the UK retail environment had become “increasingly challenging”, with higher National Insurance contributions adding significant pressure to the business.
Barry Williams, who returned as managing director in March, is leading the turnaround effort under the new ownership. He previously stated: “While our anticipated network of around 650-700 stores remains sizeable, it is of course sincerely regrettable that we’re closing a number of stores to allow us to get us back on track.
Industry analysts have noted that discount retail has become far more competitive since Poundland launched 35 years ago. AJ Bell analyst Russ Mould commented that efforts to launch larger stores and move into the groceries space “don’t appear to have worked”, whilst taking on stores following the collapse of Wilko had not paid off either.
The High Court’s decision on the restructuring plan is expected imminently, with the company’s immediate future hanging in the balance. If approved, Pepco Group is expected to retain a minority investment interest in Poundland as part of the restructuring arrangements.
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Image Credit (Shortened):
Poundland, Ann Street, Belfast (5 June 2010) – by Ardfern, licensed under CC BY‑SA 3.0, via Wikimedia Commons.
