McColl's goes bust leaving 16,000 jobs at risk

ITV News Business and Economics Editor Joel Hills explains why McColl's is on the brink of collapse and reports on a possible deal to secure the takeover of the convenience store chain

Convenience chain McColl’s has confirmed it has gone bust and will appoint administrators, putting 1,100 shops and 16,000 jobs at risk.

The troubled retailer said discussions with its lenders collapsed on Friday as creditors refused to extend a deadline for the retailer to find more cash.

It is also understood that EG Group, whose owners bought Asda for £6.8 billion early last year, are favourites to buy the company from administration.

Supermarket giant Morrisons, which is a major wholesale partner, had tabled a last-ditch effort to buy the business.

But the company confirmed “the lenders made clear that they were not satisfied that such discussions would reach an outcome acceptable to them."

The company said it will now appoint administrators from PriceWaterhouseCoopers in an effort to “preserve the future of the business and to protect the interests of employees," adding it hopes this helps to “implement a sale of the business to a third-party purchaser as soon as possible."

It is understood that Morrisons is still interested in a takeover, while Sky News has reported that forecourt giant EG Group is also interested in a deal.

Earlier on Friday, Morrisons tabled a rescue deal which would also take on the business as a going concern, absorb its debts of over £100 million and take responsibility for the company’s pension scheme.

The two businesses are major partners, with McColl’s operating hundreds of convenience shops under the Morrisons Daily brand.

Morrisons claimed its rescue proposal would have secured the future of the majority of McColl's shops and workers after lenders rejected the move.

A Morrisons spokeswoman 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.”

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McColl’s has struggled financially in recent years after witnessing soaring costs due to supply chain disruption, inflation and its large debt burden.

On Thursday evening, the company had said it was in talks over “potential financing solutions” to resolve its funding issues.

Shares in McColl’s were suspended earlier this week after the company delayed the publication of its latest financial results due to its financing talks.

McColl’s will apply to the court later today to appoint the administrators.

Shares on the stock market have been suspended.

A spokesperson for the trustee of the McColl’s Pension Schemes warned staff could miss out on payments following administration and urged any new owner to protect the schemes.

“The pension schemes are significant stakeholders in the company, and the trustees call on all potential bidders to make clear that they will respect the pension promises made to the 2,000 members by McColl’s and its subsidiaries, and will not seek to break the link between the schemes and the company," they said.

“Breaking the link between the schemes and the sponsor company, by way of a pre-pack administration, would represent a serious breach of the pension promises made to staff who have served the business loyally over many years, and risks causing the schemes to enter the Pension Protection Fund with a resulting reduction in benefits," the trustees added.