Business Secretary Jonathan Reynolds has met the US-based owners of Poundland as the government hopes to save the retailer from collapse.
The discount chain is on the brink of insolvency and Gordon Brothers, which bought it for £1 last June, has rejected a takeover bid which could have saved the 12,000 jobs currently at risk.
A meeting was due to be held on Thursday but was brought forward as the scramble to secure a rescue deal for the firm intensifies.
Gordon Brothers said it is “pursuing all avenues through the sales process” but that Poundland has faced several years of instability and “remains challenged and vulnerable”.
The firm said it is “engaging in active discussions on offers with interested parties”.
It added: “When Gordon Brothers acquired the business, it was in distress and required a radical restructure, urgent operational change and significant funding, which we provided to support the company’s ability to trade.”
Both Reynolds and Prime Minister Andy Burnham have questioned why a deal for the future of the business has not been made.
On Wednesday, a source close to business secretary said Reynolds “has been firm that Gordon Brothers must do everything in their power to protect jobs and provide certainty for workers”.
“He is pleased to have secured this commitment from Gordon Brothers in the meeting and will continue to hold the company to account and closely monitor developments,” the source added.
It is understood that Gordon Brothers made a commitment in the meeting to prioritise bids that will protect workers and units.
However, it is still unclear whether the US investment firm will keep the business together or break it up.
Meanwhile, MPs say they have called in Poundland’s owners for questioning on Wednesday 11 November to explain their role in the discount retailer’s looming insolvency.
Liam Byrne, chair of Parliament’s business committee, said: “Every report suggests Poundland is a viable, profitable business with a future ahead of it and without good reason to let it crash and burn – and then to break it up and sell it off piece by piece.
“We are asking Gordon Brothers to appear before Parliament to explain themselves and tell us just what it is that’s preventing them from accepting the fully-funded deal on the table to save more than 12,000 jobs.”
Business Minister Kate Dearden and union representatives met Poundland’s managing director Barry Williams on Wednesday.
Mr Williams told the BBC that Poundland is profitable and sales were growing.
“We’re back in profit and it has a bright future ahead of it if it’s allowed to deliver that,” he said.
Poundland has filed a notice of intention to appoint administrators, which protects it from its creditors until next Thursday.
Asked what his message for Poundland’s owner was, Burnham said Gordon Brothers should “focus on the people in your employment” and “come up with a practical solution that saves jobs and saves those stores”.
“There is a solution to be found here, sit down with us and let’s find it,” he added.
The meeting comes after a major Poundland supplier has said it will lose millions of pounds if the retailer goes bust.
Adam Turner, sales director at Bradford-based Highcrest Retail Brands, said Poundland was one of its biggest customers and its collapse would cost it “a few million” in lost sales.
The family owned business mainly sells confectionery to Poundland and turns over about £50m.
Turner said the firm becoming insolvent would leave a substantial gap in its balance sheet next year.
Highcrest was a “longstanding business that can stomach this”, Turner said. But he warned other medium and small suppliers to the retailer have told him that “if Poundland goes under, so do they”.
This echoes a warning from Poundland founder Steve Smith on Monday that two or three thousand suppliers to the firm, which only work for Poundland, would be directly affected by its collapse.
Not only would Poundland’s 12,000 staff be affected in that case, but potentially up to 30,000 overall, he told the BBC on Wednesday.
He said he was “amazed” Poundland was being put into administration, pointing to the profitability of the company.
“Also, there’s two offers on the table from some really good people,” he added.
“All I’m asking is for Gordon Brothers to see if they can put a deal together.”
Gordon Brothers said Walsall-based Poundland is “still not cash generative at a sustainable level” because of the economic issues it faces.
If Poundland’s stores are sold to new buyers, some of the employees may get new jobs on the same premises.
However, it is understood that buyers are only interested in about half the stores at present – meaning roughly 6,000 employees would not be re-employed.
If Poundland goes under, suppliers will be getting “pennies in the pound” back from the administration, he said, which is “very upsetting” – although he still hopes a deal can be done so Poundland can remain solvent.
Poundland owners Gordon Brothers will be a secured creditor, which means they are first in line to get their money back, and suppliers “who have done nothing wrong” will take the financial hit.
“It’s sad. It’s a nightmare for us all to be honest with you. It’s not just the suppliers, it’s the staff at Poundland, some of these guys have been there for many years.
“It’s from the warehouse staff all the way to the shop staff to everybody within head office. It’s a massive ripple effect through the supply chain,” he added.
Turner said he had no knowledge of whether Gordon Brothers had deliberately timed the process of Poundland going into administration so it could take advantage of having high stock levels, which it can then sell.
One of the ways Gordon Brothers makes money is through stock liquidations – selling off stock from collapsed businesses.
One insider familiar with the situation told the BBC that the timing of Poundland facing collapse was “odd” – most retailers don’t fall over in the run-up to Christmas.
