Poundworld is poised to announce its intention to appoint administrators, putting around 5,300 jobs at risk.
It comes after a buyer walked away from talks to rescue the budget retailer.
Poundworld has been put up for sale by its private equity owner TPG Capital, but a potential buyer, Alteri Investors, has walked away from sale talks.
The company’s management have said they are in talks with other potential buyers, and it is thought that Poundworld’s founder, Chris Edwards, might take on the business.
It is believed that during the sale process, which is being steered by Poundworld’s lender Santander, the retailer has rejected offers to buy the business through a pre-pack administration.
Poundworld’s losses widened in 2016-17 to £17.1 million, from £5.4 million of losses the year before.
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.
In addition, Carpetright, Mothercare and New Look have all undertaken sweeping store closure programmes.
Restaurant groups including Carluccio’s, Prezzo and Byron have also been shutting dozens of stores as they are squeezed by rising costs and a fall in consumer spending.