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Poundworld Enters Administration, Firms Should Learn from Mistakes

Discount retailer Poundworld has appointed administrators, putting 5,100 jobs at risk.

The discount retailer announced its intention to pursue a Company Voluntary Arrangement (CVA) back in April but has since failed to improve its prospects. After deciding against restructuring, efforts were doubled to find a suitable buyer for the chain. However, after another fruitless rescue talk, Deloitte has now been put in charge of the winding down of the company.

Poundworld is the most recent in a long list of businesses who have fallen into insolvency this year. Considering the five thousand employees set to lose jobs on account of the collapse, Poundworld has been noted as the biggest chain so far to fall. Department store, House of Fraser announced its own insolvency plans just last week.

Owning a business holds certain risks, and this so-called retail apocalypse has illustrated the sector’s vulnerability. Low profits do not inevitably lead to insolvency, and businesses should be aware that they do not lie beyond rescuing. At the Credit Protection Association, our debt recovery and credit management free up cash flow and conduct credit checks, to keep our Members prosperous and keep them firmly rooted on the high street.

A source said discussions between Poundworld’s owner, TPG Capital, and Rcapital about a rescue deal had fallen apart over the weekend, days after a bid from Alteri Investors, another turnaround investor, had also been terminated.

There remains some optimism that a proportion of the chain’s 5,300 staff will avoid losing their jobs if buyers can be found for parts of Poundworld’s business during the administration process.

Nevertheless, Monday’s news will be the latest in a grim tsunami of developments for Britain’s embattled high street.

Other retailers are expected to pick off parts of its 355-strong estate, while a slimmed-down Poundworld operation may also be viable.

The high street has become littered with economic landmines, every misstep causing the destruction of one retail chain after another. Low consumer confidence and the resulting poor profits have destroyed business confidence, and as a result, insolvency has merely become the easiest option. There are kinder options, however, and there are a range of alternative finance platforms available for businesses struggling with low turnover.

Help comes in the shape of a range of different platforms, from community-based funding such as crowdfunding or peer-to-peer lending. Bad cash flow does not have to drop the axe on the business altogether. At the Credit Protection Association, the collaboration between our debt recovery and credit management products ensure any new financial success is protected and any late payers are eradicated.

Here at CPA, we fight to the tooth for our members, particularly those who have suffered through late payment and bad payment practices. Furthermore, we recently created a new department within our company dedicated to getting our members rightly compensated in accordance with the Late Payment of Commerical Debts (Interest) Act 1998. This has unlocked hidden cash and potential for our members and brightened their prospects and longevity on the high street.