More than 5,000 jobs are at risk after Poundworld’s rescue talks collapse.
The discount retailer had been in talks with private equity firm R Capital over the weekend, but administrators have been called in after the negotiations broke down.
The retailer, which also trades under the Bargain Buys brand name, has 355 stores, serving around two million customers.
It has been losing money for the past two years, however. In 2016-17, losses for the financial year were £17.1m, up from £5.4m the year before.
A source told Sky News discussions between Poundworld’s owner, TPG Capital, and Rcapital about a rescue deal had fallen apart over the weekend, days after a bid from Alteri Investors, another turnaround investor, had also been terminated.
The news follows further misery on the high street after last week department store chain House of Fraser announced its plans to close 31 outlets and axe 6,000 jobs.
Poundworld could become the biggest chain by number of employees this year to fall into insolvency, following the demise of Maplin and Toys R Us UK earlier this year.
Mothercare, Carpetright, New Look, Prezzo and Jamie’s Italian, have all recently announced plans to close hundreds of outlets, putting more than 35,000 jobs at risk.
There are a number of reasons behind the crisis on the high street including pay squeezes leading shoppers having less disposable income, the popularity of online shopping and retailers struggling to cope with rising overheads.
A formal administration announcement is expected from Poundworld on Monday morning when the court opens.
Clare Boardman, joint administrator at Deloitte, said: “The retail trading environment in the UK remains extremely challenging and Poundworld has been seeking to address this through a restructure of its business. Unfortunately, this has not been possible.
“We still believe a buyer can be found for the business or at least part of it and we are keeping staff appraised of developments as they happen. We thank all employees for their support at this difficult time.”
A TPG Capital spokesman said: “This was a difficult decision for every party involved.
“We invested in Poundworld because of our belief in how the company serves its customers and the strength of its employees.
“Despite investing resources to strengthen the business, the decline in UK retail and changing consumer behaviour affected Poundworld significantly.”