Poundworld filed a notice of intention to appoint administrators last Thursday and this has given it 10 days to continue talks aimed at negotiating a sale, the spokesperson confirmed.
According to the Press Association, Alteri Investors has walked away from talks over an acquisition from USA private equity owner TPG.
If these talks fail, however, administration or a company voluntary arrangement (CVA), at best, would be the likely outcome, neither of which would be good news for the retailer's 5,000 plus staff.
Poundworld's problems first surfaced in April when its owner, the American private equity firm TPG Capital, was said to be considering a plan to launch a CVA, an insolvency procedure that would enable it to reduce rents and close about 100 stores.
POUNDWORLD, the Yorkshire-based discount group, is facing a race against time to avoid collapse, with administrators on standby after a white knight buyer walked away from talks to rescue the business.
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Poundworld founder Chris Edwards is said to have been attempting to put together a rescue bid for a chunk of the company.
The stores suffered a major rise in multi-million pound losses past year - rising from £5.4m to £17.1m in 2016/17. Read about the House of Fraser and its Carlisle store here.
It also has a Poundworld Plus outlet at the Peel Centre, Dumfries.
The retailer was hit with a £5.7 million charge for onerous leases, a provision retailers make when the cost of a lease is no longer covered by the income of the store.
Several retailers have shown significant financial distress this year, with both Maplin and Toys R Us disappearing from the high street.