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Poundland’s owners are set to be grilled on whether they are “trying to crash the retailer into administration” as political pressure mounts over the “corporate raider” investment firm.
Gordon Brothers, the US investment firm which owns Poundland, is set to be hauled in front of Parliament’s influential business committee next week and quizzed on what it is doing to protect the chain’s 12,000 workers from redundancy.
The investment firm is being put under growing political pressure over its handling of an attempted sale of the retailer, as bosses of Gordon Brothers and Poundland met with government ministers on Wednesday.
Poundland’s owner will be grilled on whether it is intentionally driving the retailer towards collapse in a bid to strip more money from the chain, a source close to the committee told City AM.
They said: “The questioning will go to the basic point: ‘what are you doing apparently trying to crash this chain into administration with however many job losses and empty shop fronts that would entail, when you’ve got a credible funded offer for it as a going concern?’.”
Liam Byrne MP, the chair of the committee, said on Wednesday that Gordon Brothers “has serious questions to answer about fixing a plan to save Poundland”.
In a letter to Gordon Brothers inviting them to appear before the committee, Byrne said the potential collapse of Poundland is a “matter of significant public interest” because of the “scale of potential job losses and the impact on high streets”.
The failure of Poundland, which employs 12,000 people directly but supports another 30,000 jobs in its supply chain, would deal a major blow to Andy Burnham’s ambitions to revitalise Britain’s high streets.
The Prime Minister said on Wednesday that the retailer’s owners must work with the government on a “practical solution” to secure the future of its workers and shops.
Gordon Brothers should “focus on the people in your employment. […] Come up with a practical solution that saves jobs and saves those stores because many of them are viable propositions,” he said.
“They’re on high streets. They matter in our communities. There is a solution to be found here. Sit down with us and let’s find it.”
‘Corporate raider’
Business secretary Jonathan Reynolds was due to meet with Gordon Brothers on Wednesday while future of work minister Kate Dearden was also set to hold talks with Poundland’s managing director and finance officer, Barry Williams and Shaun Wills.
Speaking at the business committee earlier this week, Dearden said the government would remind Gordon Brothers of “the importance of these jobs, not only to our high streets but to those families and to those communities”.
Poundland edged closer to collapse on Thursday last week, when it filed a notice to appoint administrators. This made it more likely that the company will be broken up between a horde of buyers, in a process which could see stores and jobs lost.
Gordon Brothers has faced fierce criticism for its decision not to accept a number of solvent offers to buy Poundland as a whole, from bidders including Martin Property Group and Innovest.
Robert Jenrick, Reform UK’s Treasury spokesman, told City AM on Monday that he has been offering support to multiple Poundland bidders as he hit out at “corporate raider” Gordon Brothers.
On Wednesday, it emerged that another bidder is proposing to buy Poundland as a going concern. Xyra Group Holdings, a little-known investment group which has never bought a retailer before, said it would pay £12.5m up front.
The bid is being considered by Gordon Brothers, according to sources familiar with the matter, although Xyra will need to provide proof of funds and reassure Poundland’s owners over its lack of retail experience.
Retailers including Lidl, Tesco, Iceland, B&M, The Range and Poundstretcher are among those hoping to pick up some of Poundland’s stores if the firm collapses.
