Poundland to run out of money in days if restructure not approved, court told

Poundland will run out of money within days if a restructuring plan is not approved, the High Court has been told.

The company is asking a judge to approve a plan which would save it from entering administration, with barristers telling a hearing on Tuesday that it is set to run out of money by September 7 if the scheme is not sanctioned.

Poundland was set up by Willenhall father and son market traders Keith and Steve Smith, and fellow market trader Dave Dodd, with the first store opened in Burton-on-Trent on December 13, 1990.

The brand, which grew to become one of the most popular names on the high street with around 800 stores, was taken over by Pepco in 2016 but in recent years it has suffered since the pandemic and due to the rise of online shopping and increasing competition from the likes of B&M, Home Bargains and The Range as well as budget supermarkets.

It announced plans to shut 68 stores in June after being sold by Pepco Group to Peach Bidco, a subsidiary of private equity firm Gordon Brothers, for £1.

Poundland warehouse workers were left in shock in June at the news the Springvale Distribution Centre, Bilston, is earmarked for closure with hundreds of jobs at risk.

The company's administrative headquarters continue to be in Midland Road, Walsall.

In written submissions for the hearing in London, Tom Smith KC, for Poundland Limited, said that the retailer’s financial position had “significantly deteriorated during the last two years” and that it had “performed poorly in a difficult retail and economic environment”.

He said: “The latest liquidity forecast shows that the group will run out of cash in the week ending September 7 2025.”

The barrister continued that if the restructure was not approved, the company’s directors would likely place it into administration by Friday.

In court, he said a “very significant amount of new money” would be injected into the company through the plan.

He said: “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.

“So, in effect, if you add everything up, Gordon Brothers is putting in £90 million.”

As well as the store closures, which would put around 1,000 jobs at risk, Poundland also said it would close 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, which are linked to the company’s plan to stop online sales through its Poundland.co.uk website.

In his written submissions, Mr Smith said that the company intended to “phase exits” from some of its stores, but that “this is not certain”.

Poundland first appeared at the High Court in July at what is known as a “convening hearing”, where barristers asked for a judge’s permission to convene “plan meetings” of its creditors to vote on the restructuring plan.

Following the meetings earlier this month, barristers are now asking a judge to rubber-stamp the plans at what is known as a “sanctioning hearing”.

Mr Smith said in written submissions that the company is currently due to pay back £276.5 million in loans by September 1, which would be pushed back by three years under the restructuring plan.

It would also see the company, which made a pre-tax loss of around £35.7 million in the 2024 financial year, provided with a £30 million overdraft facility and have some of its rents reduced.

Mr Smith continued 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.

No-one has appeared in court to oppose the plan being approved.

The hearing before Sir Alastair Norris is expected to conclude later on Tuesday.