McColl's enters administration- 16,000 jobs and 1,100 stores at risk after major collapse

McColl's

McColl’s has entered administration (Image: PA)

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McColl’s confirmed that discussions with lenders had broken down after the firm attempted to find a solution to its current funding crisis. In the absence of a resolution the shop chain has entered administration with PriceWaterhouseCoopers appointed as administrators. The firm had yesterday warned that it was facing adminsitration if a financing solution could not be found, with the main aim being the sale of the group.

In a statement to the stock exchange McColl’s said: “In order to protect creditors, preserve the future of the business and to protect the interests of employees, the Board was regrettably therefore left with no choice other than to place the Company in administration, appointing PriceWaterhouseCoopers LLP as administrators, in the expectation that they intend to implement a sale of the business to a third-party purchaser as soon as possible.”

Trading in McColl’s shares have been suspended.

The chain operates 1,100 shops putting the jobs of around 16,000 workers at risk.

Supermarket chain Morrisons has emerged as the front runner in speculation over who might be interested in buying out the struggling firm.

Morrisons

Morrisons could be a potential buyer after previously tabling a rescue deal (Image: Getty)

Morrisons previously tabled a rescue deal to McColl’s lenders to keep the business afloat and preserve as many jobs as possible by keeping most of its shops open.

The two firms already have close ties with McColl’s operating its smaller convenience brand Morrisons Daily.

A spokesperson for Morrisons said: “We put forward a proposal that would have avoided today’s announcement that McColl’s is being put into administration, kept the vast majority of jobs and stores safe, as well as fully protecting pensioners and lenders.  

“For thousands of hardworking people and pensioners, this is a very disappointing, damaging and unnecessary outcome.”

McColl’s has reportedly also been in talks with the Issa brothers whose private equity firm TDR Capital previously took over Asda and EG Petrol.

Asda

Asda owners the Issa brothers are also thought to be interested (Image: Getty)

Tracing its origins back to a first store in Scotland in 1901 McColl’s now describes itself as a “leading neighbourhood retailer.”

According to its website it serves over five million customers a week and is the largest post office operator in the UK.

Despite its strong local presence it has struggled recently with sales and profits falling short of hopes.

Speaking to BBC Radio 4’s Today programme Teresa Wickham, a former director of Safeway, said McColl’s had been “caught in a difficult place, particularly with Covid” due to the shift to online shopping and lack of investment for its pivot into more fresh produce.

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McColl's

McColl’s has struggled since the pandemic (Image: Getty)

Tim Synes, Partner at Insolvency and Asset Recovery at law firm Stewarts, said: “Here the lenders appear to have decided that a sale of McColls’ business and assets out of administration will be a better outcome than allowing it to trade on and worsen their position.

“It is likely that conversations started with potential buyers before the administration, and so we can reasonably expect the winning bidder or bidders to emerge in the coming days or weeks.”

Roy Walsh

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