Poundland owner to free up £10m to pay suppliers before bosses face government questioning

Gordon Brothers, the US investment firm that owns Poundland, has agreed to release around £10m of funding held on the retailer's balance sheet so that suppliers can be paid, City AM reports. The money is understood to be the first in a series of payments. The step comes a day before Poundland's bosses are due to be questioned by the government.

A source told City AM that Gordon Brothers pledged earlier in the day to protect jobs after pressure from the business secretary and growing political backlash over its handling of a sale process. The firm met Jonathan Reynolds to discuss the future of the company and its 12,000 staff. A source close to Reynolds said he stressed that the group "must do everything in [its] power to protect jobs and provide certainty for workers". The source added that he would keep holding the company to account and monitor developments. Sky News first reported the funding.

Industry sources described the release of funds as a "vital step" but warned it did not necessarily mean Poundland could avoid administration as soon as this week, according to Sky News.

Separately, City AM reported that a little-known investment firm, Xyra Group Holdings, has emerged as a "frontrunner" to buy Poundland. Founded by 23-year-old Manvedeep Singh, it has asked Poundland founder Steve Smith to support its £12.5m bid. Smith has spoken with Xyra in recent days but is understood not to plan to take part in any takeover effort until a deal is completed.