The UK discount retailer Wilko is in danger of bankruptcy unless it can find a last minute buyer or investor due to “increasing cash pressures”.
The chain, with 400 stores and 12,000 employees, announced on Thursday that they had filed an intention to appoint administrator at the High Court.
This will stop creditors, such as landlords or suppliers, from claiming money for a period of 10 days prior to the formal appointment of insolvency practitioners. Mark Jackson, Wilko’s chief executive said that this should allow Wilko and interested parties to continue rescue discussions.
“We can confirm that there has been a high level of interest. . . We don’t have an offer today that will provide the liquidity we need in the short time frame we have, given the increasing cash pressures.
People familiar with the situation say that if the talks fail PwC will probably be appointed administrator.
Wilko began as a small hardware store in Leicester in 1930, capitalizing on the growing popularity of “the handyman” and the “DIYer”, who were looking to improve their home.
has a recenthistory of trouble, despite its annual turnover of £1.2bn. It borrowed £40mn last year from the restructuring specialist Hilco, as it delayed some payments to suppliers and landlords.
It has since announced that it will lay off 400 employees. The chain has been evaluating whether it should launch a company voluntary agreement (CVA) in order to negotiate rent reductions with landlords.
Jackson expressed confidence that the retailer would be able to become profitable once again with a “robust turn-around plan”, after the retailer plunged into a £36mn deficit in the year up to January 2022, from a £3.2mn gain the previous year.
He added that discussions with interested parties are ongoing, but that there is no guarantee of a deal. A recapitalisation may lead to the Wilkinsons relinquishing their majority stake.
Jeremy Whiteson is a restructuring and insolvency lawyer at Fladgate. He said that after the pressure was removed by the temporary restrictions on creditor actions and the boost the government gave the economy, retailers now find the financial pressures are back with a vengeance.