The UK government is examining the circumstances surrounding Poundland’s potential collapse, as concerns grow over the future of the discount retailer and approximately 12,000 jobs.

Business Secretary Jonathan Reynolds has asked senior business adviser David Bickerton to establish the facts surrounding the company’s possible move into administration, according to reporting by the Financial Times.

Poundland has faced mounting pressure from rising operating costs, intense competition from rival discount retailers and increased shoplifting. The company has also moved away from its traditional £1 pricing model as it responds to changing market conditions.

The retailer’s owners, distressed-investment firm Gordon Brothers, launched an accelerated sale process in September. A reported offer from Ireland’s Martin Property Group to acquire the business as a going concern was rejected, raising further concerns about the possibility of insolvency or a breakup.

Poundland says other bids for the whole business and viable parts of the retailer will be considered. The situation highlights the wider challenges facing UK high-street retailers, particularly discount chains dealing with squeezed margins and changing consumer spending.

The outcome could have significant implications for employees, suppliers, shopping centres and local communities across Britain.