Poundland is teetering on the edge of collapse after its directors filed a notice of intent to appoint administrators, in a move that puts the future of its thousands of workers in doubt.

The company made the filing to the High Court on Thursday, suggesting that AlixPartners, its administrators, could be formally called in to take control of the business in the coming days. A collapse of Poundland could put nearly 12,000 jobs at risk and shutter its 640 stores in the UK and Ireland. 

Poundland’s American owners Gordon Brothers had been considering a solvent takeover offer from Irish property firm Martin Property Group but have since rebuffed the bid in a dispute over a loan. Gordon Brothers wanted £30m to cover a shareholder loan despite inheriting it from Poundland’s previous owner Pepco when it bought the company for a nominal £1 last year.

This appointment of administrators has triggered a 10-day moratorium on the retailer’s creditors calling in their debts, allowing it a short window in which to save its stores and employees.

Should Poundland go under, it will throw scrutiny onto the conduct of Gordon Brothers over the sale process. Martin Property Group’s bid had been backed by Poundland’s management but the Irish company had refused to cover the £30m requested by Gordon Brothers, sources said.

Three new directors – who had been drafted in to accelerate the sale process – resigned earlier this week over Gordon Brother’s refusal to accept the bid.

Poundland’s collapse would deal a significant blow to Andy Burnham’s pledge to revive Britain’s high streets. The discount retailer is one of the country’s best-known high street brands and a fixture of town centres across the UK.

The Prime Minister will also be paying close attention to the future of Poundland’s distribution centre in Makerfield, his parliamentary constituency. Martin Property Group had promised to protect this site but its security would be far from secured if the retailer was broken apart.

Barry Williams, Poundland’s managing director, said on Thursday: “Despite enormous efforts it has not been possible to identify an acceptable offer for the business as a whole. The process has however attracted several established retail operators who have made formal offers, collectively these cover a significant part of the business, and we believe offer the best available prospects for shareholders, creditors and to preserve jobs.

“We recognise any sale process creates uncertainty and particularly when set against a challenging UK economic environment. We thank all stakeholders, and in particular our people for their support during this period.”

Burnham’s high street revival at risk

While Martin Property Group was the frontrunner to buy the entire Poundland business, a number of retailers have tabled bids for significant parts of the company’s sprawling 600-store estate. 

These bidders have committed to taking on the staff at all the stores they acquire, according to Transfer of Undertakings (TUPE) rules, which aim to protect employees when a business changes hands.

Lidl, Iceland, The Range, B&M and Poundstretcher have all expressed interest in snapping up select stores if the company is broken up. These firms will be on the lookout for well-placed stores and some of Poundland’s stock. A break-up of the discount retailer could bring about the end of the Poundland brand.

The uncertain future of Poundland’s employees had already prompted stark warnings from Usdaw, the retail union, who branded Gordon Brothers an “absolute disgrace” and warned the retailer was teetering on the brink of administration.  

Bally Auluk, the union’s national officer, said: “The owners’ failure to accept a solvent offer leads us to conclude they want to let the company fall into administration and make 11,000 people redundant in the run up to Christmas. I urge the Government to take robust action and save thousands of retail jobs.”

Business secretary Jonathan Reynolds wrote to Gordon Brothers this week to establish the facts of the situation, according to reports.