As 4,000 Wilko stores risk closure, here is what going into administration means
With Wilko in financial trouble, fans of the popular high street discount chain are wondering whether some or all of the shops could close.
The company is on the brink of going into administration, which would put 12,000 jobs at risk.
This week, Wilko filed a notice of intention to appoint administrators in the High Court, which gives it a 10-day window of protection from its creditors to try and secure funding.
It has around 400 stores in the UK.
Shoppers had noticed that some of Wilco’s shelves were regularly bare in recent months, as the firm faced challenges paying its suppliers, and plans to cut 400 jobs were announced in February.
Wilko is often seen by shoppers as a successor to much-loved Woolworths, which closed down in the UK in 2009, offering a huge range of goods from homeware to toiletries and the ever-popular pick and mix.
So what exactly does ‘going into administration’ mean?
Let’s find out.
What does going into administration mean?
At present, Wilco hasn’t gone into administration – but it has served notice than unless it can sort its finances, this will happen in 10 days’ time.
When a firm goes into administration, it is a legal process in which an administrator is appointed by the directors, a creditor or the court. They take control of the company and everything it owns.
The administrator (a licensed insolvency practitioner) will first attempt to save the business. They also have the power to make any employees redundant.
If saving it isn’t possible, they will try to claw back as much money as possible for creditors without immediately winding it up.
According to the government’s Companies House, this could involve allowing the company to continue to trade for a period, while seeking to sell the business or assets such as:
- goodwill
- trademarks
- patents
- equipment
- the customer database
- software
- content or websites
If neither of the above options work, they can liquidate the company.
Wilko’s chief executive Mark Jackson said: ‘While we can confirm we’ve had a significant level of interest, including indicative offers that we believe would meet all our financial criteria to recapitalise the business, at present, we don’t today have an offer that provides the necessary liquidity in the time we have available, given the mounting cash pressures we’re faced with.
‘Unfortunately, with this in mind, today we’re having to take the difficult decision to file [a notice of intention].’
Is Wilko closing?
At present, no closures have been announced – but whether Wilko remains on the high street will depend on what happens in the next few days and weeks.
Accountant PricewaterhouseCoopers (PwC) has been brought in to advise the retailer in its search for a buyer, which had secured a lifeline worth £40 million from Homebase owner Hilco in January.
If funding can’t be found, and Wilko enters administration, the adminstrator has 8 weeks to write a statement explaining what they plan to do. This could be:
- negotiating with creditors so the company can keep trading
- selling the business as a ‘going concern’ to another company so it can carry on
- selling assets, paying creditors from money raised and closing the company
So it’s too soon to tell whether Wilko will remain on our high streets, or will go the same way as good old Woolworths and British Home Stores in the UK.
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