A major UK discount retailer is fighting to avoid collapse as it races to secure approval for a rescue plan.
The chain has warned it may have "no choice" but to enter administration if the restructuring deal fails.
Poundstretcher told the High Court on Wednesday that it faces administration unless creditors back its restructuring proposal.
The retailer operates nearly 300 stores across the UK and employs around 3,000 staff.
Lawyers representing the retailer told the court that directors would "likely have no choice" but to file for administration should the proposed plan fail to gain approval.
US investment firm Fortress, which also controls Majestic Wine, acquired Poundstretcher in 2024 for an undisclosed amount.
The company had previously stated in March that it would seek rent reductions from landlords while maintaining all stores and jobs.
The company's legal team warned that without the restructuring agreement, Poundstretcher would lack sufficient funds to cover a £2.8million payment due in the final week of June.
By late July, this shortfall would grow substantially to £9.7million.
Tom Smith KC, representing the retailer, outlined what would follow if the plan collapsed.
The company had previously stated in March that it would seek rent reductions from landlords
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"In the administration, the administrators are anticipated to continue trading for a limited period while available liquidity is used to support a sale of the stock," he stated in written submissions to the court.
The restructuring plan aims to return the business to "financial stability" and allow implementation of a turnaround strategy.
The retailer's troubles stretch back several years, with performance declining steadily since 2020.
Court submissions attributed this deterioration to weakened consumer confidence, escalating operational expenses and inflationary pressures affecting the business.
The high street chain has warned it is staring down the barrel of collapse
| GETTYIn response to these financial difficulties, Poundstretcher engaged Teneo as financial advisors to develop a recovery strategy aimed at avoiding insolvency and restoring profitability.
The company announced in March its intention to negotiate lower rents with property owners across its portfolio, emphasising that this approach would not involve closing outlets or making redundancies.
Wednesday's proceedings constituted a convening hearing, where the court grants permission for creditor meetings to consider the proposed restructuring.
The turnaround strategy involves expanding the range of well-known household brands and improving the store network by selectively opening new locations in areas with greater customer traffic.
Britain's high streets have struggled in recent years | PACreditors will gather on 26 May to cast their votes on the restructuring proposal.
Mr Justice Hildyard ruled that he was "content" for the matter to proceed to these creditor meetings.
Should those affected by the plan vote in favour, the case will return to the High Court for final judicial approval.
This sanction hearing has been scheduled for June 4, when a judge will decide whether to formally approve the restructuring arrangement.
A spokesman for Poundstretcher said: "We welcome today’s court decision that allows our plan to proceed.
"Our plan is focused on strengthening Poundstretcher’s long-term position and creating a company that can grow in the years ahead.
"There are no planned store closures or redundancies, and our stores continue to welcome customers throughout this process.
"Our priority remains serving customers across the UK."