McColl’s confirmed that discussions with lenders had broken down after the firm attempted to find a solution to its current funding crisis. In the absence of a resolution the shop chain has entered administration with PriceWaterhouseCoopers appointed as administrators. The firm had yesterday warned that it was facing adminsitration if a financing solution could not be found, with the main aim being the sale of the group.
In a statement to the stock exchange McColl’s said: “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.”
Trading in McColl’s shares have been suspended.
The chain operates 1,100 shops putting the jobs of around 16,000 workers at risk.
Supermarket chain Morrisons has emerged as the front runner in speculation over who might be interested in buying out the struggling firm.
Tim Synes, Partner at Insolvency and Asset Recovery at law firm Stewarts, said: “Here the lenders appear to have decided that a sale of McColls’ business and assets out of administration will be a better outcome than allowing it to trade on and worsen their position.
“It is likely that conversations started with potential buyers before the administration, and so we can reasonably expect the winning bidder or bidders to emerge in the coming days or weeks.”