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UK discount retailer Wilko faces collapse unless it finds a last-minute buyer or investor amid “mounting cash pressures”.
The chain, which employs 12,000 people and has 400 stores, said on Thursday that it had filed a notice of intention to appoint administrators at the High Court.
The move will prevent creditors such as suppliers or landlords from claiming any money for 10 days before insolvency practitioners are formally appointed. This should allow Wilko to continue rescue talks with interested parties, chief executive Mark Jackson said on Thursday.
“While we can confirm we’ve had a significant level of interest . . . at present, we don’t today have an offer that provides the necessary liquidity in the time we have available, given the mounting cash pressures we’re faced with,” he added.
In the event the talks fail, PwC would probably be appointed as administrators, according to people familiar with the matter.
Wilko started life from a single hardware store in 1930 in Leicester, capitalising on the rise of “the handyman and the DIYer” as more people sought to improve their homes.
Though it has an annual turnover of £1.2bn, the company has had a troubled recent history. Last year it borrowed £40mn from restructuring specialist Hilco as it deferred some payments to landlords and suppliers.
It sold and leased back its distribution centre in Nottinghamshire to pay down some of its debts and has subsequently said it would make 400 staff redundant. In recent months, the chain has been exploring whether to launch a so-called company voluntary arrangement (CVA) to allow it to seek rent cuts from landlords.
Jackson said he was confident the retailer could become profitable again under a “robust turnaround plan” after it plunged to a £36mn loss in the year to January 2022 from a £3.2mn profit the year before.
Discussions with interested parties were ongoing, he added, but there was no guarantee a deal would materialise. A recapitalisation could lead to the Wilkinson family relinquishing majority control.
Jeremy Whiteson, restructuring and insolvency partner at law firm Fladgate, said: “With pressure removed during the pandemic by temporary legal restrictions on creditor action and a boost to the economy from government handouts, retailers are now finding that the financial pressures have returned with a vengeance.”
Additional reporting by Michael O’Dwyer
