(Nov 12): Poundland is seeking more time in its battle to avoid insolvency, via a fresh legal filing on Thursday that will come as a reprieve for thousands of workers at the British discount retailer.

The clock has been ticking for Poundland since it filed a notice of intention to appoint administrators last week, buying it 10 days of breathing space from creditors and time to find a buyer to prevent it going under. The deadline was Thursday, and under intense political pressure, the company has effectively applied for the court’s approval to push back insolvency by another 10 days.

Poundland’s board said the sale process is ongoing, and the company has funding to continue trading for the notice period. The extension is aimed at “identifying the best available prospects for shareholders, creditors and our people”, the board said, adding stores remain open and trading.

With about 12,000 jobs at stake, Prime Minister Andy Burnham has urged owner Gordon Brothers to prevent its collapse. Though Poundland’s own management says it is profitable after an uptick in recent trading, Gordon Brothers has argued finances at the company — which it bought for £1 (RM5.42) last year — are not sustainable and remain vulnerable to a future downturn.

Gordon Brothers has faced scrutiny over how much it could make in fees and interest in an insolvency process if Poundland is broken up. UK lawmakers have accused it of extracting millions of pounds from the retailer, as well as starving it of funds to pay suppliers ahead of the key Christmas trading season.

“Gordon Brothers refused to say it will prioritise saving jobs over and above its own financial returns,” Liam Byrne, a Labour MP and chair of the House of Commons business select committee, said in a statement after hearing testimony from the company on Wednesday.

Gordon Brothers told MPs at the hearing it had released £11 million of funding to Poundland last week, and plans to release a similar amount next week.

The filing “may have brought some breathing space, but it means little to the staff and suppliers still facing weeks of uncertainty in the run-up to Christmas,” said Freddy Khalastchi, a recovery and restructuring partner at Menzies LLP. “Every day without an agreement makes a rescue harder, as suppliers tend to tighten their terms while a retailer’s future hangs in the balance.”

Gordon Brothers sits near the front of the queue for repayment if Poundland collapses. Most of its loans are secured against the retailer’s assets, meaning proceeds from selling inventory and other assets would go to Gordon Brothers before suppliers and other unsecured creditors.

The sales process hasn’t yielded offers that matched Gordon Brothers’ expectations, Bloomberg previously reported. A £15 million bid from real estate investor Martin Property Group — £10 million of which was deferred — was about half what Gordon Brothers has been asking for.

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