Poundworld has gone into administration today following the collapse last week of talks with a rescue buyer.
Partners at Deloitte have been appointed joint administrators of the 335-strong chain.
The collapse puts more than 5,000 jobs at risk, making it the biggest retail insolvency so far this year by job numbers.
However, Deloitte said that the business would continue trading, with no store closures or redundancies planned at this time.
A buyer for all or part of the business is now being sought.
After buyout firm Alteri Investors walked away from a rescue deal, Poundworld's owner TPG Capital last week said it was in talks with other potential buyers.
Former Little Chef owner RCapital was touted as one possible saviour, according to Sky News. The chain's founder Chris Edwards was also thought at one point to be assembling a bid.
Clare Boardman, joint administrator of Poundworld, said that the chain had been affected by the "challenging" retail environment.
"We still believe a buyer can be found for the business or at least part of it and we are keeping staff appraised of developments as they happen. We thank all employees for their support at this difficult time.”