July 12, 2024

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McColl’s convenience store chain is on the verge of bankruptcy

McColl’s, a convenience store business, is on the verge of bankruptcy, putting thousands of jobs in the UK at risk.

Unless talks over a rescue deal succeed, the store said it was “increasingly likely” that it would go into administration.

McColl’s employs more than 16,000 people and has a collaboration deal with Morrison’s grocery chain.

Without immediate financing, McColl’s claimed the company would “likely be placed into administration to arrange a sale of the company to a third-party purchaser and secure the interests of creditors and workers.”

On Friday, Sky News reported that Morrisons had presented a solution to McColl’s lenders which involves putting capital into the faltering shop. 

It claimed that keeping most of McColl’s 1,400 stores open would prevent the company from collapsing and save many jobs. However, the publicly-traded company announced earlier this week that its shares would be suspended if it failed to meet the deadline for filing its annual results.

According to McColl’s, its accounts will not be signed off in time to meet the deadline.

McColl’s was “stuck in a tough place, particularly with Covid,” Teresa Wickham, a former director of Safeway, said.

She added that retailers who did this did well since shopping habits switched to buying more locally during the coronavirus epidemic, but the company lacked investment and only a small percentage of its stores completed the switch.

Last year, McColl’s successfully secured £30 million from shareholders to invest in the growth of its Morrisons Daily convenience stores, but it warned at the time that the coronavirus outbreak had impacted footfall.

At around the same time, the government accused it and other companies of failing to pay some of their workers the UK minimum wage.

The underpayments were due to historical errors, according to McColl’s, Pret, and Welcome Break, and employees were quickly reimbursed.

Businesses were ordered to repay the funds as well as pay a £3.2 million punishment for violations such as withholding pay from salaries for uniforms and costs or failing to pay the correct apprenticeship rate.