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Former Wilko chair Lisa Wilkinson told MPs on Thursday that the high-street chain’s ultimate owner did not have enough assets “to fill a £50mn pension hole” as she apologised for its collapse. 

The Commons’ business and trade committee quizzed former bosses, auditors and industry experts about the reasons for the 92-year-old chain’s demise, which left the taxpayer on the hook for £42mn in redundancy payments, according to MPs.  

The committee asked Wilkinson, who is the granddaughter of the company’s founder, why nearly £150mn was taken out of the business over the last 20 years, including £3.75mn in the year before the retailer’s collapse as trading deteriorated.

Wilko fell into administration in August, in one of the UK high street’s biggest casualties in recent years. It had 400 shops and employed about 12,000 staff before it disappeared from the high street.

Wilkinson admitted on Tuesday that “Wilko failed because we ran out of cash. That was what caused the downfall in the end.”

The company paid its owners £9mn in dividends since 2019, according to recent calculations from administrators at PwC.

Wilkinson defended the dividend payments, saying they would have “followed the correct corporate governance, they would have been recommended by the [chief financial officer], they would have gone through the boards of directors [and] we would only have paid those dividends if we had either the right profit in year or reserved profits”.

Asked whether there were resources available to plug the pension deficit at Amalgamated Holdings Wilkinson Limited, the ultimate parent of Wilko that is owned by a series of family trusts, Wilkinson said: “No, they are tied up in other things . . . They are invested in start-up businesses, UK properties and a limited amount of stock market investments”. 

She said the assets were not worth “tens of millions”, “it’s a small [sum], I’m going to say [£3mn], but I could be wrong”.

The former chair said she was “devastated” about letting down workers, suppliers and customers, telling MPs “we have let each and every one of those people down with the insolvency that Wilko has done”.

Wilkinson partly blamed former prime minister Liz Truss’s mini-Budget and surging interest rates for Wilko’s collapse.

“We were about to enter into secured lending arrangements with Macquarie when the 2022 mini-Budget happened.

“Literally we were in the midst of that, and at that point the interest terms on that loan were hiked massively and that became unfeasible.”

She held back tears as she recalled being advised by other directors and the administrators not to issue a thank you to Wilko’s employees when it collapsed.

Auditor EY stood by its 2022 assessment of Wilko’s financial statements, telling MPs it had raised a “serious warning flag” about the fact that the business could run into difficulties. 

Victoria Venning, partner at EY, said the accounts made clear that Wilko had “insufficient financing in place to withstand a severe but plausible downturn in trading activity”.

She added: “This was not hidden away. This was not loose language. This was very clear language in our audit opinion that brought serious attention to the situation that the business found itself in and drew attention . . . to the fact that there was a plausible scenario whereby the company could run out of cash if sufficient financing wasn’t raised.”