The grocery chain Planet Organic has put insolvency practitioners on standby as it races to find new backers in a bid to secure its future.
Sky News has learnt that the company filed a notice of intention to appoint administrators on Thursday – a move which provides it with breathing space from creditors as it continues rescue talks.
City sources said Planet Organic required a multimillion pound capital injection by the middle of April in order to survive.
Discussions with a number of interested parties are said to be ongoing after Waitrose pulled out of talks late last week.
Any sale of the business could take place through a pre-pack administration process, although sources said that Planet Organic’s management, led by chief executive George Dymond, was focused on keeping the business as intact as possible.
Any insolvency event would put a chunk of the chain’s 360-strong workforce at risk.
In a message to staff on Thursday seen by Sky News, Mr Dymond said: “Over the past 12 months, we have been extremely busy fundraising in order to raise money to support the business and unlock our store expansion plan.
“Despite our wonderful stores being largely profitable, a herculean effort by the buying team to improve our margins and a huge improvement in the costs of running both stores and the e-commerce business, it is a fact that the business is still loss-making.
“In reality we have simply not got back to the levels of sales that we were seeing before the pandemic. So, while we have taken every possible action to improve our position, including additional investment from our existing shareholders, we have so far been unsuccessful in raising sufficient funds needed to support the business and the growth plan.
“Since the beginning of the year, we have been in advanced discussions with a potential investor with a view to them supporting the business, putting a platform in place to enable us to achieve this growth.
“Regrettably and unexpectedly these discussions ended last Friday without an investment being agreed. This is largely because of the current uncertainty in the retail sector, as well as market caution more broadly.
“This unfortunately means that the future of Planet Organic is currently uncertain.
“We are still working hard alongside our advisors to explore alternative options to secure investment which will enable us to preserve our amazing business and we remain in dialogue with a number of other interested parties.
“In the meantime, however, we have had to take legal steps to protect the position of the business to afford us the time to be able to find a solution to the challenging situation we face, including filing at court a notice of intention to appoint administrators which is the first step in a potential administration process.
“We know that this will create more media attention and a lot of questions from our customers – the key message is that it is business as usual for now.
“I want you all to know how very sorry I am that we are in this position – I am conscious that this will be a very uncertain time for you all.
“As a short-term measure, and in order to make sure that everyone is paid for work they have done, we will be running an interim payroll tomorrow.
“For now that means it is business as usual and your support, as always, is greatly appreciated and essential to give Planet Organic the very best chance of securing a healthy future.”
Planet Organic, which was founded in 1995 by Renee Elliot, has been working with Interpath Advisory on a review of its strategic options since early this year.
The chain, which trades from 13 stores, sells organic food and drink, as well as healthcare and bodycare products.
Like many retailers, its recent performance has been hampered by the pandemic and reduced city centre footfall.
It is understood to have been loss-making in each of its last two financial years.