Poundland hopeful for last-minute rescue deal to stave off collapse

Image source, Getty ImagesBySimon JackBusiness editorPublished12 minutes agoPoundland and its 11,000 employees are hopeful that the retailer's impending collapse can be delayed to allow time for a last-minute rescue deal.The discount chain has been edging towards administration after being blocked by its owners from accessing cash in its bank accounts.A deadline to secure a buyer for the business is set to expire at midnight, but sources close to the situation have told the BBC that they expect more time will be given, thanks to the release of £10m in funding.A committee of MPs is set to question Gordon Brothers, Poundland's US owners, on Wednesday following accusations that the investment firm hopes to profit from selling off Poundland's 600 stores and stock piecemeal.Gordon Brothers - which bought the chain for just £1 last year - is accused of forcing that outcome by restricting Poundland's access to available cash needed to restock stores and pay wages and rent, ahead of the crucial Christmas trading period. The investment firm has denied the claims.But pressure remains on Poundland's owners after a takeover bid was rejected. The decision prompted calls for answers from politicians, including Prime Minister Andy Burnham.About £50m had been frozen by Gordon Brothers, the BBC understands, meaning Poundland bosses were unable to restock shelves across its 600 shops.However, sources close to the matter told the BBC on Tuesday that a release of £10m by its owners, while "small in the scale of things" could help at least postpone the chain's collapse while a longer term solution was explored.Views on Poundland performance differThe 10-day moratorium to protect Poundland from its creditors expires on Thursday, but if there is a prospect of a solvent deal, the deadline could be extended.Views on the chain's performance differ between those running operations and the owners. Poundland boss Barry Williams told staff last week that like-for-like sales, which exclude new store openings, were up 11.4%. The sales period included Halloween, but Williams said this was £1.5m ahead of budget.He added the business made a profit of £18.1m in the year to September, which was a "strong recovery" from the previous year where there were losses of £68m.However, Gordon Brothers has painted a different picture, saying the chain remains "challenged and vulnerable to any potential downturn in future trading".There has been interest from the likes of Poundstretcher, Tesco and B&M in picking up Poundland stores which could mean continuing employment for workers in the event the chain is broken up and sold off in chunks.The main issue is whether a piecemeal sale would protect more jobs than a buyer willing to keep Poundland as a national chain.Related topicsRetailingUK High StreetsPoundlandCompanies