Poundstretcher restructuring plan needed to avoid administration, court told

Nina Massey, Press Association Law Correspondent

Poundstretcher will “likely have no choice” but to file for administration if a restructuring plan is not approved, the High Court has heard.

The discount retailer, which has almost 300 stores and 3,000 staff across the UK, including 11 in Wales, was bought by US investment firm Fortress, which also owns Majestic Wine, in 2024 for an undisclosed sum.

In March, the company revealed plans to ask landlords to slash rents across its store estate as it looked to secure its long-term future, but insisted it would not be shutting shops or cutting jobs.

At a hearing on Wednesday, lawyers for the company said that if a restructuring plan was not approved, it would have “insufficient funds” to meet its funding need of £2.8 million which is due in the week beginning June 28.

This sum would increase to £9.7 million in the week commencing July 26.

In written submissions, Tom Smith KC, for Poundstretcher, said: “In those circumstances, the directors of the plan company will likely have no choice but to file for administration.

“In the administration, the administrators are anticipated to continue trading for a limited period while available liquidity is used to support a sale of the stock… ”

He said that the purpose of the restructuring plan was to restore Poundstretcher to “financial stability” and to enable them to “implement the turnaround business plan”.

Creditors

The hearing in London was what is known as a “convening hearing”, where barristers ask for a judge’s permission to convene meetings of a company’s creditors to vote on the restructuring plan.

Mr Smith also told the court that since 2020, “the group’s performance has continued to deteriorate due to subdued customer confidence, rising operating costs and inflationary pressures”.

He said: “In light of its financial difficulties, the plan company has prepared the turnaround business plan, alongside Teneo, whom the plan company engaged as financial advisors, with the aim of avoiding administration and restoring the group to profitability.”

Mr Smith said that this involved “shifting the product mix of the plan company to include more well-known household brands” and “optimising the plan company’s store portfolio, by opening stores on a selective basis in locations with higher footfall”.

In a ruling, Mr Justice Hildyard said he was “content” that the matter should proceed to the meetings with the creditors on May 26.

If they vote in favour of the scheme, the plan is set to return to the High Court to be approved by a judge at a “sanction hearing” scheduled for June 4.