Wilko: Redundancies suspended while rescue bids considered

Redundancies at collapsed retail chain Wilko have been suspended while rescue bids for the business are considered.

The GMB union met with PwC, which is overseeing the sale of the retailer, on Tuesday after calling for an urgent meeting with the business secretary.

National secretary Andy Prendergast warned that Wilko was "not out of the woods yet by any means".

The chain recently collapsed into administration which has put 12,500 jobs at risk.

Mr Prendergast acknowledged that while the pause on any potential job losses was a "positive development", this is still "a time of incredible stress and worry" for staff.

About 400 shops across the UK are also at risk of closure. Wilko also operates a head office and two distribution centres.

On Monday, the union wrote to business secretary Kemi Badenoch, suggesting that bidders had reported "difficulties" engaging with PwC, the administrators.

But PwC said it was working "relentlessly" to secure a sale of the retailer and "talks are continuing with a number of parties" in what the BBC has learnt has been dubbed "Project Falcon" by the firm.

A fresh rescue bid for the retail chain emerged on Sunday, when private equity firm M2 Capital confirmed it had made a £90m bid for the business. It pledged to retain all employees' jobs for two years.

The owner of HMV, Canadian businessman Doug Putman, is also interested in salvaging some of the business.

Wilko had been struggling with a cash shortage and a failure to keep up with rivals such as B&M and Poundland as the soaring cost of living has pushed shoppers to seek out bargains.

The union asked the business secretary for reassurance that "all steps will be taken to protect jobs as part of this process".

A government spokesperson said: "While this is a commercial decision for the company, we understand that this will be a concerning time for workers at Wilko."

The government would "continue to stand firmly behind business", having provided support with VAT cuts and business rates holidays in recent years, the spokesperson added.

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A race to rescue?

The GMB union also said it was concerned by the influence of Hilco, a restructuring specialist which had already lent Wilko £40m as it was struggling.

Reports in the Guardian newspaper suggested that some industry experts were sceptical that a rescue deal would emerge because liquidation might result in a better outcome for Wilko's creditors, such as Hilco.

When administrators take over a failed business, they are obligated to try to work out how to get the best return for those that the firm owed money to, as opposed to protecting jobs or keeping shops open.

PwC said it had been working "relentlessly" to secure a sale of the business.

"We are actively engaging with all interested parties and assessing the deliverability of all bids made."

Its spokesman added that it was "intent on achieving the best outcome for everyone involved", from creditors to staff.

• What has gone wrong at Wilko?

• What's next for Wilko and its 12,500 workers?

The business was founded in 1930 when JK Wilkinson opened his first store in Leicester. It expanded across the Midlands initially and by the 1990s became one of Britain's fastest-growing retailers.

Shoppers had noticed gaps on shelves after Wilko struggled to pay suppliers and at least one credit insurer withdrew trade cover, prompting some companies to pause deliveries.

Lisa Wilkinson, the retailer's chairwoman until January this year and the granddaughter of the firm's founder, told the Sunday Times "everybody has thrown everything" at trying to save the business.

"The team members, the suppliers, the landlords... everybody has thrown their soul and heart at it," she said.

The company has been criticised for paying millions of pounds in dividends in recent years, but Ms Wilkinson said the firm would have collapsed even if it had not made these payments.

"Hindsight is a great bedfellow and I like to think we did all the things we should do when we paid dividends," she told the newspaper.

She added that if they had not paid any dividends "it might have made us survive a couple of months longer. What we have taken out really wouldn't have made a difference".