Poundworld pauses CVA plan in favour of sale

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Poundworld creditors

Poundworld has reportedly paused its restructuring plan after parent company TPG received expressions of interest and put the retailer up for sale.

The news comes less than a fortnight after it emerged the discount retailer was to seek creditor approval for a proposed company voluntary arrangement (CVA) that included plans to close up to 100 of its 355 stores, threatening hundreds of jobs.

According to BBC News, the CVA plans have now been placed on pause after TPG, a US-based private equity firm, received expressions of interest in the retailer.

Sky News reported that TPG has drafted in Deloitte to find a buyer for Poundworld by the end of the month.

It is understood that the short timeframe is to allow any new buyer to continue the restructuring process if required.

Poundworld employs about 5500 staff in the UK.

CVAs are a form of insolvency that allows retailers to shut loss-making stores, reduce rents and cut costs in a bid to keep the business in operation and avoid administration.

TPG’s decision to seek a buyer for the entire Poundworld business means the fate of its proposed CVA, which was due to be formally launched in coming weeks, was now in doubt.

Several retailers – including household names New Look and Carpetright have launched CVs year.

Analysts predict more CVAs this year, such as House of Fraser’s confirmed CVA to be unveiled in June and potentially another from Mothercare.

CVAs, along with the collapse of Toys R Us’ UK arm and Maplin, have left in their wake hundreds of vacant properties on the high street and a trail of job losses.

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