Poundland founder says he would invest if an opportunity arises as minister prepares to meet board

Poundland, which Smith started in 1990 with a store in Burton-upon-Trent, now has 600 stores in the UK and Ireland. Its current owner, US private equity firm Gordon Brothers, bought the company from Polish retail group Pepco last year for £1, has stopped funding the business and rejected a takeover offer from Irish firm Martin Property Group (MPG).

Smith, who left the business in 2006, said he had tried to contact Gordon Brothers over the past three months and received no reply. He told the BBC he was “really surprised” to learn of the administration filing while sales were up 11.2 per cent on last year. “And maybe I was a bit too late, but I'd certainly... with talking to the staff and how Poundland's performing at the moment, I'd certainly, if there's an opportunity, I definitely want to put some money back in there.”

He said Poundland made a loss last year but expected a good profit this year, and estimated that 20,000 to 30,000 jobs could be affected once suppliers were counted, warning that thousands of suppliers worked only for Poundland and that its absence from high streets would “cause a lot of other retailers to fall as well”.

Dearden's meeting with senior Poundland executives later this week is understood to be predominantly a “fact finding” meeting, with government sources conceding there is limited scope to intervene in a commercial transaction. No meeting is currently planned between the government and Gordon Brothers executives. The meeting was first reported by Sky News.

Prime Minister Andy Burnham has said the government was “ready to support” staff and called for answers over why an offer to buy the business had been rejected.

Liam Byrne, chair of the Business, Innovation, Science and Trade Committee, said he felt the company could be saved and that “the whole deal stinks to high heaven right now”. He said Poundland's owner could be trying “to cut and run, to sell a business that is in fact a going concern in order to maximize their own profits and put in jeopardy 12,000 British jobs on the high street”, and urged ministers to “get on the case now” rather than leave it to Thursday.

Gordon Brothers said it was evaluating interest for the whole business and formal and indicative offers for significant viable parts of it. “While Martin Property Group had been identified as the preferred bidder by Poundland's management team, attention must now turn to other active bids,” it said. Concerns have been raised that the firm declined MPG's offer to keep Poundland afloat in order to ensure repayment of a £30 million loan it inherited after buying the company for £1.

Poundland Limited's board said it had been “working on a formal sale process for Poundland” and that despite “enormous efforts” it had not been possible to identify an acceptable offer for the business as a whole. It added: “We recognise any sale process creates uncertainty and particularly when set against a challenging UK economic environment.”