Poundland looks set to avoid immediate collapse after its US owners told MPs on Wednesday they were in favour of extending a deadline to find a rescue deal.

The discount chain, which has 11,000 employees, has been edging towards administration after being blocked by Gordon Borthers from accessing cash in its bank accounts.

A deadline to secure a buyer for the business is set to expire at midnight, but sources close to the situation told the BBC they expect more time will be given, thanks to the release of £10m in funding.

A committee of MPs questioned Gordon Brothers following accusations that the investment firm hopes to profit from selling off Poundland's 600 stores and stock piecemeal.

Gordon Brothers - which bought the chain for just £1 last year - is accused of forcing that outcome by restricting Poundland's access to available cash needed to restock stores and pay wages and rent, ahead of the crucial Christmas trading period.

The investment firm, which specialises in buying and restructuring distressed companies, has denied the claims.

But pressure remains on Poundland's owners after a takeover bid was rejected. The decision prompted calls for answers from politicians, including Prime Minister Andy Burnham.

About £50m had been frozen by Gordon Brothers, the BBC understands, meaning Poundland bosses were unable to restock shelves across its 600 shops.

However, sources close to the matter told the BBC on Tuesday that a release of £10m by its owners, while "small in the scale of things" could help at least postpone the chain's collapse while a longer term solution was explored.

'Do the right thing'

Following the behind-closed-doors meeting between MPs on the business and trade committee and representatives of Gordon Brothers, chair Liam Byrne said he was "deeply concerned" that firm's behaviour "may have jeopardised thousands of jobs on Britain's high streets".

"Over the last 17 months, they have taken millions out of Poundland when the business was on a 'knife edge'," he posted on social media.

"Now Poundland appears to be on the rebound, there's concerning signs it's been strangled of access to its own funds in what should be its busiest trading period in the run up to Christmas."

He claimed that Gordon Brothers refused to say it would prioritise saving jobs "over and above its own financial returns", but added the prospect of a good outcome for the business was "now higher thanks to the focus on the business of the last week".

He called on Gordon Brothers "to do the right thing" and give Poundland access to its own funds and work to protect the maximum number of jobs.

Emerging from the private meeting with MPs, Poundland's chief executive Barry Williams told the BBC the chain's board would hold an urgent meeting on Wednesday night.

Views on Poundland performance differ

The 10-day moratorium to protect Poundland from its creditors expires on Thursday, but if there is a prospect of a solvent deal, the deadline could be extended.

Views on the chain's performance differ between those running operations and the owners.

Poundland boss Williams told staff last week that like-for-like sales, which exclude new store openings, were up 11.4%. The sales period included Halloween, but Williams said this was £1.5m ahead of budget.

He added the business made a profit of £18.1m in the year to September, which was a "strong recovery" from the previous year where there were losses of £68m.

However, Gordon Brothers has painted a different picture, saying the chain remains "challenged and vulnerable to any potential downturn in future trading".

It has argued the best way of securing jobs may be to split up the business and sell chunks of its 600 sites to other retailers.

There has been interest from the likes of Poundstretcher, Tesco and B&M in picking up Poundland stores which could mean continuing employment for workers in the event the chain is broken up.

The main issue is whether a piecemeal sale would protect more jobs than a buyer willing to keep Poundland as a national chain.