Convenience chain McColl’s has collapsed into administration, the company confirmed this afternoon.
A statement, from administrators PriceWaterhouseCoopers said there were plans to “implement a sale of the business to a third-party purchaser as soon as possible”.
The collapse, which puts 16,000 jobs at risk, is the largest retail collapse since the Edinburgh Woollen Mill Group in 2020 and Debenhams, which employed about 12,000 people, in that same year.
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Yesterday, supermarket giant Morrisons proposed a last-minute rescue deal for McColl's, after the chain warned that unless it secured more funding, administration was increasingly likely. Morrisons is already in a partnership with McColl's which operates more than 200 Morrisons Daily convenience stores.
This morning the retailer’s senior lenders declined to further extend the waiver of the company’s banking covenants, which has now expired. The statement said that while discussions with the company’s key wholesale supplier to find a solution for its funding issues and to create a stable platform going forward had made significant progress, the lenders made clear that they were not satisfied that such discussions would reach an outcome 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,” the retailer said in a statement.
Morrisons' improved offer, made on Thursday evening, is thought to include taking on McColl's pension commitments and its £170m debt. The offer was made after weeks of talks with McColl's and its creditors for weeks as it aims to thrash out a rescue.
McColl's, which has 1,400 stores, has a wholesale tie-up with Martin's newsagents. as well as Morrisons. The chain is also the largest operator for the Post Office in the UK, operating a branch from around 600 of its stores. The chain, which employs about 16,000 people, or roughly 6000 on a full-time equivalent basis, raised £30million from shareholders in a cash call last year.
Jonathan Miller, McColl's chief executive, said in December that the financial year had "undoubtedly been a tough year for the business, ending with the widely reported and ongoing supply chain challenges".
The retailer had already been struggling previous to the pandemic, and Mr Miller is understood to have invested £3m personally in the fundraising last summer in a bid to save the business.
McColl's started in 1901, with the group being founded in 1973. It has purchased and merged with various other chains in its 49 years of trading, and now has around five million customers every week.
A statement from McColl's said: "Further to the announcement on 3 May 2022, the Company's senior lenders have this morning declined to further extend the waiver of the Company's banking covenants, which has now expired. Whilst the constructive discussions with the Company's key wholesale supplier to find a solution with them to the Company's funding issues and create a stable platform going forward had made significant progress, the lenders made clear that they were not satisfied that such discussions would reach an outcome 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, 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. "
