Poundland has sought protection from creditors as its owner weighs a rescue against a break-up, putting the future of 600 stores and up to 12,000 staff in doubt before Christmas.

The 36-year-old retailer filed notice of its intention to appoint administrators at the high court on Thursday, with AlixPartners lined up to oversee the process. The notice provides 10 days’ protection while a solution is sought. Suppliers withholding deliveries are already weakening its ability to trade.

Gordon Brothers, the US restructuring specialist that bought Poundland from Pepco for £1 in June last year, has rejected a management-backed offer from Northern Ireland’s Martin Property Group. Talks nevertheless continue.

The offer is understood to be worth about £15m, covering half a £30m shareholder loan, alongside taking responsibility for approximately £90m of asset-backed borrowing. Sources close to the process say only about £7.5m would arrive upfront, with the remainder over two years: a structure they argue leaves creditors, employees and suppliers facing uncertainty.

Pepco, which holds £7.5m of the shareholder debt, is prepared to wait for repayment to help preserve the business. One source familiar with Poundland alleged Gordon Brothers had already received about £10m in fees and interest over the past year. That figure remains unconfirmed by Gordon Brothers.

Gordon Brothers says options for all or parts of Poundland are being evaluated to minimise uncertainty. It is understood to favour firm offers from established retailers for roughly half the stores, which could be converted to their formats, over an uncertain whole-chain rescue. Sources defending that approach question the prospective buyer’s experience of running a large UK retail chain.

The owners face scrutiny from the prime minister. Andy Burnham has also called for jobs to be protected and an explanation if a potential rescue owner has been rejected.

The immediate financing dispute sits atop a deeper commercial problem. Rising goods, wage, energy and business-rates costs have undermined Poundland’s original £1 proposition, pushing some prices to £5 or more. Store closures have reduced its purchasing scale, while discount chains and online rivals compete for customers with little spare cash. Poundland also acknowledges that introducing Pepco clothing was a mistake.

Pre-tax losses widened from £45.4m in 2024 to £85.3m in the year to September 2025, as sales fell almost 12% to £1.55bn across the UK, Republic of Ireland and Isle of Man.

In September, Poundland reported 3.3% growth at established stores over its latest three-month period. Sources nevertheless say it was not generating enough cash to repay its loans. Whether that recovery can support a rescue remains unresolved.