My Local, the convenience chain born out of Morrisons’ failed c-store business nine months ago, is reported to have filed a notice of intention to appoint administrators.
KPMG, which has been working with the chain’s management and its backer Greybull Capital on strategic options for the struggling business, is said to have been lined up to handle an administration. Greybull’s move to file a notice of intention gives the chain protection from creditors for 10 days.
Whilst it has not been confirmed that the administrators will be appointed, reports suggested the process will begin next week, potentially putting the jobs of around 1,700 staff at risk.
A team led by retail entrepreneur Mike Greene and backed by Greybull bought the 140 stores from Morrisons last September for £25m, although only around 125 are currently trading. At the time, the group said it had plans to expand the rebranded chain and bring it back into profit in its first year of operation. However, the chain has struggled to compete in the cut-throat convenience sector with reports suggesting that supply chain problems and poorly located sites has hampered My Local’s progress.
Morrisons could face liabilities of up to £20m if My Local goes under as it retained a guarantee on a number of store lease obligations as part of the original sale agreement.
- For a quick reminder of the Administration procedure, see UK government regulations
- Essentially, the administrator will try to stop the company being wound up (‘liquidated’). If they can’t, they will try to pay as much of the company’s debts as possible from the company’s assets, with an 8 week limit to write a statement explaining what they plan to do