Poundland has avoided entering administration after a restructuring plan was approved by a judge at the High Court, days before the company was due to run out of money.
Barristers for the retailer had told a hearing earlier on Tuesday that it would be placed into administration by Friday and was set to run out of money by September 7 if the plan was not approved.
The scheme will see up to £60 million of new funding injected to keep the retailer afloat, among other terms.
Approving the restructure, Sir Alastair Norris said: “I am going to sanction the plan. I will give my reasons later.”
Poundland, founded in Burton upon Trent, Staffordshire, in 1990, had approximately 14,700 staff members and operated around 800 stores when it was sold by Pepco Group to Peach Bidco, a subsidiary of private equity firm Gordon Brothers, for £1 in June.
The company then announced plans to shut 68 stores, which would affect around 1,000 staff.
Poundland also said it would close its frozen and digital distribution site at Darton, South Yorkshire, later this year and another warehouse at Springvale in Bilston, West Midlands, early next year, impacting a further 350 jobs.
The company also plans to stop online sales through its Poundland.co.uk website next month, and to retire its Perks app.
Three stores closed before July this year, and 37 have closed this month, including in Newcastle, Leicester and Peterborough.
Another 11 stores, including those in Blackburn, Kettering and Taunton, are due to close on Sunday, and a further store, in Irvine, North Ayrshire, Scotland, will close on September 14.
A further 16 stores, which have not yet been confirmed, are also due to close.
In written submissions for the hearing on Tuesday, Tom Smith KC, for Poundland Limited, said that its “profitability has sharply declined” in recent years.
He said: “The group was performing well prior to and during the Covid-19 pandemic.
“However, the business has struggled in the last two years in an increasingly challenging UK retail environment.
“Its response to these challenges was to broaden its offering, including by adding chilled and frozen products and introducing online sales.
“However, these changes increased operating costs, as did increases in the UK national living wage and employer national insurance contributions.”
In court, he said a “very significant amount of new money” would be injected into the company through the plan.
The scheme will also see Poundland given a £30m overdraft facility, and dates for the retailer to pay back loans pushed back to 2028.
Some of its rents will also be reduced under the plan, with Mr Smith telling the court that many of Poundland’s stores “are unprofitable at their current rents”, with the company paying “higher than market rates for a significant number” of its sites.
The restructure does not cover Poundland’s operations in the Republic of Ireland and the Isle of Man, where it trades as Dealz.
No-one has appeared in court to oppose the plan being approved.
Barry Williams, Poundland’s managing director, said following the hearing that the decision was “vitally important for Poundland, allowing us to stabilise the business, securing the future of hundreds of stores and thousands of jobs”.
He said: “Despite the opportunity this ruling provides, I’m extremely mindful of its consequences for our colleagues, especially those leaving us as we streamline our store estate, distribution network and support teams.
“We acknowledge the direct impact our plans have had on them and re-confirm our commitment to do all we can to support them.
“Nevertheless, our wider attention must now turn to getting Poundland back to growth.
“In the coming weeks we will focus on getting us back on track, revamping ranges, lowering prices and creating the simpler and more focused Poundland we know our customers are eager for us to deliver.”
