Poundworld, which employs 5500 people has collapsed into administrators after buyers Rcapital and Alteri Investors pulled out over the weekend. It is possible that some of the estate will be bought by other retailers but it is likely that many will have to close down.
Update: The founder of the chain Chris Edwards has confirmed that he is talking to KPMG about buying 200+ stores Chris Edwards says business, which he sold to TPG in 2015, "shouldn't be in this position" and its predicament is "totally down to bad management".
Poundworld's owner, TPG Capital, the American private equity firm has had to restructure its other businesses with Prezzo Restaurants by going through a company voluntary arrangement.
Impairments on fixed assets and leases, as well as restructuring costs, saw Poundworld slip to a £17.1m pre-tax loss for the year to 31 March.
Poundworld was run by Mr Edwards who sold to TPG Capital for £75m and now runs Poundstretcher.
The company has opened a distribution centre in west Yorkshire which consolidated its logistics functions into a single 500,000 square foot facility.
Poundworld has also expanded its product range in a bid to keep pace with rivals.
Budget retailers have become popular with investors pricing competition has intensified. Aldi and Lidl have been expanding fast in the grocery sector and Primark has been doing very well in the clothes business.
For landlords who are opposed to the CVA mechanism this might be a timely reminder that these companies are in effect insolvent and if the CVA is not approved then it is likely that the company will be forced to go into administration. It should be remembered that the process of administration is much more costly and unsecured creditors are likely to receive even less.