The future of Poundland hangs in the balance as the discount chain edges towards collapse, the BBC understands.
The retailer’s bosses are filing a notice of intention to appoint administrators, which if approved by the High Court, will give the business 10 days breathing space to find a rescue deal.
The move comes after Poundland’s managing director Barry Williams wrote a memo to his 12,000 staff across its 600 stores in the UK and Ireland saying the chains’ US owner had limited Poundland’s access to funding.
It is understood the firm’s owner, Gordon Brothers, wants to break up the firm, with rivals Poundstretcher, B&M and Lidl interested in potentially buying up stores.
Gordon Brothers bought Poundland, which had been struggling, from the Polish retail group Pepco in June last year for a nominal £1, but a little over a year later it put the business up for sale.
Irish firm Martin Property Group (MPG) put forward a bid to take the business on as a going concern, which was the preferred option for management, but it is understood this did not meet Gordon Brothers’ expectations.
Gordon Brothers wants to recoup a £30m shareholder loan it inherited from the previous owners as part of a its deal, but it is understood the Martin Property Group offer was for £5m, with the rest of the payment deferred.
It means Poundland is now heading towards an insolvency process.
Gordon Brothers could secure a new owner through what is known as a pre-pack administration.
But the most likely option for the business to be broken up and for parcels of stores to be sold.
Poundland was founded in 1990 with a store in Burton-upon-Trent, and has around 20 million customers per year.
It sells low-cost everyday products, general merchandise and fashion on local high streets.
