Burnham 'ready to support' Poundland staff as retailer faces collapse

The prime minister called for answers over why an offer to buy the business from its current owners, which would have protected jobs, had been rejected.

The discount chain is teetering on the edge after its US-based owners Gordon Brothers cut off a vital funding supply and rejected a takeover offer from Irish firm Martin Property Group (MPG).

Burnham said: "We want to see jobs protected. If there was a potential owner to avoid this that hasn't been accepted, then the business secretary and I want to know why that is the case.

The retailer's bosses have filed a notice of intention to appoint administrators, giving the business 10 days to find a rescue deal.

The move comes after managing director Barry Williams told staff that the chain's US owner had cut off a vital supply of funding despite Poundland's strong sales.

Business Secretary Jonathan Reynolds earlier said he was "very much concerned" by the uncertainty clouding Poundland's future.

Gordon Brothers bought Poundland, which had been struggling, from the Polish retail group Pepco last year for a nominal £1. A little over a year later, it put the business up for sale.

It could still be purchased out of administration in a so-called pre-pack deal, but the most likely option is for it to be broken up and for Poundland's stores to be sold off.

It has across its 600 stores in the UK and Ireland, where it trades as Dealz.

A Gordon Brothers insider said breaking the firm up would allow creditors to recover more money and that this process would ultimately offer the best outcome for staff. The US investment firm's position is that current employees may be able to get employment with new store owners.

These include Poundstretcher owner, Fortress, which according to one insider is interested in taking on between 200 and 250 stores.

More than half a dozen retailers, include Iceland, Lidl, and B&M, have expressed interest in Poundland's store estate.

He claimed staff were having to "watch from the sidelines as a multi-billion pound company jeopardises their livelihoods as it tries to extract £30m from a business it bought for £1".

He said Williams had "reluctantly" kicked off the administration process to give the business time to find a rescue deal, adding that Usdaw was urging Gordon Brothers to reconsider.

"As you all know, our sales are strong and our recovery is taking root. This business simply does not deserve to go into any kind of administration," the chain's managing director Williams said in a message to staff this week.

"I'm disappointed to have to tell you that Gordon Brothers have given instructions that restricts our access to funds that we would, in normal circumstances expect to access fully under our existing loan agreement," he added.

Williams said in the memo, seen by the BBC, that the offer from Martin Property Group was a "fully funded, ready to go bid that would have kept the business intact and able to continue the remarkable progress we've made".

Three independent directors who were appointed earlier this month to help oversee a sale resigned with immediate effect after disagreeing with Gordon Brothers' decision not to accept MPG's solvent offer.