McColl’s collapses into administration
Convenience store chain McColl’s has collapsed into administration, putting 16,000 jobs at risk.
McColl’s – which has 1,400 stores – said the company’s lenders did not want to extend banking agreements that were keeping the business going.
Accountancy firm PwC has been appointed as administrators and will look for a buyer “as soon as possible”.
Supermarket chain Morrisons proposed a rescue deal on Thursday to try to safeguard the chain.
Morrisons is already in a partnership with McColl’s, which operates more than 200 Morrisons Daily convenience stores.
However, McColl’s said that while discussions with Morrisons had “made significant progress”, its lenders had made clear they would not reach a conclusion that was acceptable to them.
“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,” said McColl’s.
Asda co-owner EG Group, which is controlled by the billionaire Issa brothers, could strike a deal to rescue the bulk of the company, Sky New reported. EG Group declined to comment.
McColl’s raised £30m from shareholders last year to invest in expanding its Morrisons Daily convenience stores, but at the time it warned that footfall had been hit by the coronavirus pandemic.
McColl’s said it had asked for trading in its shares to remain suspended.
Morrisons had been talking to McColl’s and its creditors for a number of weeks as it aimed to thrash out a rescue.
After being knocked back Morrisons made an improved offer on Thursday evening which was thought to include taking on McColl’s pension commitments and its £170m debt.
Morrisons and McColl’s signed a deal five years ago which involved Morrisons being the convenience store chain’s sole supplier for grocery products, including the relaunched Safeway brand.
A spokesperson for McColl’s pension schemes called on bidders for the firm to “respect pension promises” made to 2,000 scheme members.
“The two pension schemes are relatively small compared to the McColl’s business, and funding them would clearly be manageable for the ongoing business, or for anyone who acquires it,” the spokesperson said.
A pre-pack administration – which allows an insolvent firm to sell assets to bidders – could break the link between the pensions schemes and the firm, they said.
Sky News reported that EG Group was preparing to take over McColl’s via a pre-pack administration.
This “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 spokesperson said.
The Pension Protection Fund takes on certain types of pension scheme when an employer collapses.
The fund, which is paid for in part by a levy on other pension funds, pays pensioners and protects those yet to reach pensionable age.