Major U.K. High Street Retailers Flounder, Over 31,000 Jobs On The Line

November 27, 2008 9:18 a.m. EST

London, England (AHN) - Refusal by lenders of two major High Street shops to sign a deal led to the collapse of Woolworths and MFI. The two British retail giants entered into administration Wednesday, placing more than 31,000 jobs on the line.

Woolworths, which would have marked 100 years in 2009, turned over the management of 800 retail stores to administrators.

MFI, a furniture and fitted kitchen specialist, collapsed a few hours ahead after it failed to meet rent demands.

One-fourth of MFI's 111 outlets will not open Thursday, while 1,200 MFI employees may soon become jobless.

Until the eleventh hour, British officials led by Lord Mandelson, tried to avert the collapse of the 99-year old Woolworths through a meeting with lenders GMAC and Burdale. The meeting lasted late Tuesday night.

The lenders, which had a total $595 million (385 million pound) loan to Woolworths, were asked to keep the stores open and its 25,000 workers paid for a few more weeks.

Another Woolworths subsidiary, EUK which distributes DVDs and CDs to other retailers, had also entered into administration despite its profitable operation.

Woolworths' woes have been dragging over the past few years as it competed with supermarkets, online shops and specialty stores. To survive it refocused on children and family merchandise and then tried online sales, but the experiments were failures.