Is Wilko closing down? What going into administration means for stores with chain on the brink of collapse
Budget high-street chain Wilko has gone into administration, putting 12,000 jobs at risk.
The board appointed PwC as administrator on Thursday, after rescue talks with a number of potential buyers stalled.
Gordon Brothers, Alteri Investors and Opcapita were among the groups reportedly considering offers to take over the company, which has 408 stores across the UK.
Wilko has now suspended home delivery orders, but is continuing to allow people to order by click-and-collect.
The company had appointed PwC in recent months to attempt to find a buyer to inject a fresh sum of money into the business. Mark Jackson, Wilko’s chief executive, said the business saw “a significant level of interest” but failed to secure a takeover to keep it afloat due to “mounting cash pressures”.
What happens to Wilko now?
Administration, Company Rescue explains, “is when a company becomes insolvent and is put under the control of licensed insolvency practitioners”.
The directors and the secured lenders can appoint administrators through a court process in order to protect the company as much as possible.
Once in administration, a company can continue to trade. But daily management and control passes from the directors to the appointed administrator.
If possible, the administrator will create financial restructuring plans to save the company. This may take the form of a sale to an unrelated party.
If it cannot be reasonably saved, the administrator will aim to achieve a better return for creditors than would be likely if the company were wound up.
The administrator has eight weeks to formulate a proposal, after which it is voted on by the creditors.
Companies House explains: “If the administration involves a sale of all or part of the company’s business, the proceeds (after the costs of the procedure) will be distributed to creditors in a statutory order of priority.”
Wilko has struggled in recent years, due to a tough economic climate and falling sales, borrowing £40m last year from restructuring specialist Hilco.
The company announced last year it would cut 400 jobs to save money.
Gaps have appeared on the shelves after the retailer struggled to pay suppliers, with at least one credit insurer removing its cover.
Mr Jackson said last week: “We continue to believe that our robust turnaround plan, with significant re-stabilisation cost savings in progress, will deliver a profitable Wilko and maximise the significant opportunities that we know exist.”
Who owns Wilko?
Wilko was founded as Wilkinson Cash Stores by James Kemsey Wilkinson in 1930 in Leicester. It remains under the private ownership of the family.
Mr Wilkinson’s son, Tony Wilkinson, joined the company in 1960 and took over as chairman in 1972, before he was succeeded by his daughter, Lisa Wilkinson, and his niece, Karin Swann. Ms Swann sold her family’s 50 per cent holding in the company to Ms Wilkinson in 2014. Ms Wilkinson remains the company’s director.
The company changed its name to Wilkinson Hardware Stores in 1941, before rebranding as Wilko in 2014.
