Major discount chain beloved by Aussies collapses - as customers are urged to redeem loyalty perks NOW
- Cheap as Chips sold to Choice the Discount Store
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A beloved discount retailer with more than 500 staff has been thrown a lifeline after the chain plunged into administration this week.
Cheap as Chips, which operates 47 stores across South Australia, Victoria and New South Wales, has been sold to competitor Choice the Discount Store.
The rescue deal will more than double Choice's footprint, which currently sits at about 35 stores across Queensland, NSW and Victoria.
Under the proposed agreement, Cheap as Chips' parent company, Palcove, will be restructured, with 44 stores set to remain open.
However, three locations, Albury in NSW, Wonthaggi in Victoria and Windsor Gardens in Adelaide, will shut their doors for good.
Administrators Glenn Livingstone, Benjamin Ho and Nicholas Charlwood from WLP Restructuring Partners have taken control of the business and say trading will continue while the sale is reviewed.
'All store employees will be retained after the sale,' WLP said in a statement to The Advertiser, however there will be a 'small number' of redundancies at head office.
No further store closures are expected.
Cheap as Chips (pictured) has been sold after collapsing into administration this week
The collapse follows a 'challenging trading period' for the retailer, with administrators citing cash flow constraints and fierce local and international competition.
The amount of debt outstanding remains unclear.
Creditors will have the final say on the retailer's future when they vote on the proposed deed of company arrangement, with a meeting scheduled for January 12.
Mr Livingstone has urged customers to redeem loyalty perks before they expire.
'The company will continue to honour its "chippie rewards" loyalty benefits and gift cards on a dollar-for-dollar spend basis, up until January 31,' he said.
'We encourage all customers to redeem these rewards before they expire.'
He stressed the immediate priority is 'working with creditors, management, staff and the purchaser to ensure continuity of operations and employment, while examining the proposed transaction.'
Cheap as Chips' major creditor has reportedly backed the restructure.
The Cheap as Chips brand has been sold to bargain retail company Choice the Discount Store
'We look forward to working with all parties to finalise the restructure and enable the restructured business and the majority of employees to continue successfully into the future under Choice ownership,' the administrators said.
The deal marks a significant shake-up for Australia's bargain retail sector, following Canadian chain Dollarama's $259million takeover of The Reject Shop earlier this year.
Cheap as Chips first opened in 1985 in Morphett Vale, Adelaide, and quickly became a favourite among bargain hunters.
Daily Mail has contacted Cheap as Chips for comment.
