MPs have accused the owner of Poundland of extracting millions of pounds from the budget retailer when it was on a "knife-edge" as it seeks extra time to secure a rescue deal.
The management of Poundland, which employs 12,000 people and operates 600 stores in the UK and Ireland, will seek a two-week extension of legal protection from creditors from the high court on Thursday morning.
The budget chain's owner, Gordon Brothers, is under pressure to accept a bid for the company that would save retail jobs and protect thousands of suppliers. Poundland filed a notice of intention to appoint administrators two weeks ago.
The legal measure protects Poundland from the demands of creditors until Thursday morning while a solution to its problems is sought.
Directors of Poundland are now seeking a further 10 working days' grace, which must be approved by the high court. That comes after Gordon Brothers, which is understood to be supportive of the extension, released £10m more in funds to help Poundland secure new stock and keep trading.
Without the legal protection in place, Poundland is likely to have to call in administrators; the advisory firm Alix Partners is already lined up.
The European head of Gordon Brothers, Mark Newton-Jones, gave evidence in private for almost two hours to the Commons business select committee on Wednesday afternoon after MPs called on the government to protect Poundland and other high street stores from "predatory capitalism" and asset-stripping last week.
Liam Byrne, the chair of the committee, said that after questioning Newton-Jones he was "deeply concerned that Gordon Brothers' behaviour may have jeopardised thousands of jobs on Britain's high streets".
He said: "Over the last 17 months, they have taken millions out of Poundland when the business was on a 'knife-edge'.
"Now Poundland appears to be on the rebound, there's concerning signs it's been strangled of access to its own funds in what should be its busiest trading period in the run-up to Christmas.
"Worse, Gordon Brothers refused to say it will prioritise saving jobs over and above its own financial returns."
The committee separately heard from Poundland's management team, led by Barry Williams, who had been fighting to save the business.
Sources said Poundland continued to trade well, with sales up year on year, despite its problems, but it has only enough cash to support the business for a short period. Gordon Brothers has said Poundland remains "challenged and vulnerable to any potential downturn in future trading".
Gordon Brothers is understood to remain in talks with three potential bidders for the entire chain but has indicated it can raise more from a break-up of Poundland, selling off stock and parcels of stores to rival retailers.
The bids are understood to be worth less than the £30m in debts taken on by shareholders when Gordon Brothers bought the chain. It bought Poundland for a nominal £1 from its previous owner, the European retail group Pepco, in June 2025.
Pepco still holds £7.5m of the £30m shareholder debt. It is prepared to wait for repayment in the hope of saving the business.
Gordon Brothers is still in talks with Martin Property Group, the Northern Irish family-owned firm supporting a management-backed rescue bid for the discount chain, which includes the Dealz chain in Ireland.
Martin Property Group's first bid had been rejected by Gordon Brothers as it amounted to no more than half the £30m it wants for Poundland with less than £7m up front.
A little-known finance company, Xyra Group, is thought to have offered about £12m up front and close to £30m in total. However, Xyra has not been involved with retail businesses previously.
Gordon Brothers has been approached for comment.