Discount retailer Poundland has avoided falling into administration after a restructuring plan was approved days before it was set to run out of money.

The business asked the High Court to approve a deal, claiming that it would have run out of money without it by 7 September.

It comes after Poundland unveiled plans to shut 68 stores in August, after being sold to a subsidiary of a private equity firm for £1.

Barrister Tom Smith KC, for Poundland Limited, wrote the firm’s financial position had “significantly deteriorated during the last two years” and noted that it had “performed poorly in a difficult retail and economic environment”.

He highlighted that if the restructure had not been approved, the firm’s directors would probably have put it into administration.

Poundland managing director Barry Williams said the move was “vitally important for Poundland, allowing us to stabilise the business, securing the future of hundreds of stores and thousands of jobs”.

“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,” said Williams.

“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.”

Smith explained that a “very significant amount of new money” will be injected into Poundland.

“The plan will release a further £60m of funding, and that is in addition to the £30m that has already gone in following the purchase that took place on June 12.

“So, in effect, if you add everything up, Gordon Brothers is putting in £90m.”

Nobody appeared at court to oppose the plan from being approved.

In January, Poundland owner Pepco group called in advisers to address the value retailer’s sales slump.

The parent company took on AlixPartners to deal with the ongoing sales decline, with City sources raising the possibility that it could be looking into the sale of the chain or was mulling a formal restructuring process that could result in job cuts and store closures.

In March, it was reported that Pepco Group was “actively exploring” a potential sale of Poundland as it moved towards a simpler business model focused on its higher-margin Pepco brand.

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