Poundland has avoided collapsing into administration after its turnaround plan was approved days before the chain was due to run out of money.

The budget retailer had asked the judge to approve a deal, saying it would have run out of cash without it by 7 September.

Poundland has around 14,700 staff and operates about 800 stores. It has previously announced plans to close 68 shops after it was sold to a subsidiary of a private equity firm for £1, putting about 1,000 jobs at risk.

The High Court heard on Tuesday that the turnaround plan would see a significant injection of cash into the company.

Tom Smith KC, for Poundland Limited, wrote that the retailer’s financial position had “significantly deteriorated during the last two years” and that it had “performed poorly in a difficult retail and economic environment”.

He said if the restructure had not been approved, the company’s directors would likely have placed it into administration by Friday.

Approving the rescue plan, Sir Alastair Norris said: “I am going to sanction the plan. I will give my reasons later.”

Poundland’s managing director Barry Williams said the decision would “stabilise the business”.

“Despite the opportunity this ruling provides, I’m extremely mindful of its consequences for our colleagues – especially those leaving us as we streamline our store estate, distribution network and support teams.”

He added that the focus would now focus on getting Poundland “back to growth” by “revamping ranges, lowering prices” and “creating the simpler and more focused Poundland we know our customers are eager for us to deliver”.

Poundland, which was founded in Staffordshire in 1990, announced plans to shut 68 stores in June after being sold by the Polish group Pepco to Peach Bidco, a subsidiary of private equity firm Gordon Brothers, for £1.

The company reported a pre-tax loss of £35.7m in the last financial year. Earlier this year, it said a rise in employer National Insurance contributions would add to its difficulties.

Speaking in court, Mr Smith said a “very significant amount of new money” would be injected into the company through its turnaround plan.

“The plan will release a further £60m of funding, and that is in addition to the £30m that has already gone in following the purchase that took place on June 12,” he said.

“So, in effect, if you add everything up, Gordon Brothers is putting in £90m.”

Poundland originally sold all of its products for less than £1, but since 2017 it has sold a growing number of goods for more than a pound.

In January, it added 900 products to its “£1 or less” range amid poor sales numbers.

As well as the store closures, Poundland plans to close its frozen and digital distribution site in Darton, South Yorkshire, later this year, and another warehouse at Springvale in Bilston, West Midlands, early next year.

It also stopped selling products online, leading to the loss of 350 warehouse jobs.

In his submission, Mr Smith said that the company is currently due to pay back £276.5m in loans by 1 September, which would be pushed back by three years under the restructuring plan.

It will also see the company provided with a £30m overdraft facility and have some of its rents reduced.

Mr Smith continued that many of Poundland’s stores were “unprofitable at their current rents”, with the company paying “higher than market rates for a significant number” of its sites.

No-one appeared in court to oppose the plan being approved.