Morrisons is facing a potential liability of up to £20m as My Local, the group that bought the Bradford-based group’s convenience store chain, looks at options for the business, including administration.
More than 2,000 jobs are at risk as My Local, which operates 120 stores, has brought in accountancy firm KPMG.
My Local, led by retail veteran and The Secret Millionaire star Mike Green, bought 140 Morrisons M Local convenience stores for £25m in September last year. The deal was backed by Greybull Capital, which along with OpCapita, was one of the co-investors in the electrical retailer Comet, which collapsed in 2012.
As part of the deal, Morrisons retained a guarantee on a number of lease obligations, meaning that they will revert to Morrisons if My Local collapses.
Morrisons has since begun a new convenience store experiment with petrol forecourt operator Motor Fuel Group but is not expected to reopen any stores that revert to its control.
KPMG has looked at a number of options, including the sale of up to 10 stores to the Co-op, as industry insiders said the business had found trading tough. The chain is understood to have suffered because of the poor location of its stores, many of which were former Blockbuster sites bought when the video rental chain went bust.
The grocery market is in the midst of a price war prompted by the rise of discounters Aldi and Lidl, which have been rapidly opening stores and winning over more shoppers.
This article was written by Sarah Butler, for theguardian.com on Monday 20th June 2016 14.21 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010