Discount chain B&M has agreed to buy dozens of shops from the collapsed retailer Wilko, as talks over a bigger rescue deal hang in the balance.

B&M said it will take on up to 51 of Wilko’s 400 stores in a deal worth £13m.

Wilko fell into administration in August as it struggled with sharp losses and a cash shortage.

It is understood that a deal tabled by HMV’s owner has stalled over issues with suppliers and funding.

Wilko was founded in 1930 and by the 1990s became one of Britain’s fastest-growing retailers.

But the discount chain has faced strong competition from rivals including B&M, Poundland and Home Bargains, as the high cost of living has pushed shoppers to seek out bargains.

Wilko’s stores remain open for now as it seeks a buyer for a bigger chunk of the estate, but more than 12,500 jobs were put at risk by the collapse.

The first redundancies – 269 jobs at Wilko’s support centre in Worksop and 14 others at a subsidiary firm – started on Monday.

B&M has not confirmed which Wilko shops it has bought, or how many posts could be saved as a result of the deal.

The money raised by the sale will help recover funds for Wilko’s creditors, as administrators PwC oversee the running of the business with all of its associated costs such as employee wages.

Retail expert Catherine Shuttleworth said the deal would also allow B&M to attract more customers. The chain has stepped up its expansion plans in the wake of the pandemic, opening 21 new stores in the last financial year.

“This may also create local jobs for Wilko colleagues in the newly-owned stores,” Ms Shuttleworth said.

Several retailers and investors have reportedly been in talks with PwC about potentially buying Wilko’s shops or online brand.

At the end of last week, Canadian billionaire Doug Putman was thought to be edging closer to a deal to buy up to 300 shops. In 2019, his company Sunrise Records bought the collapsed music chain HMV and saved some 1,500 jobs and about 100 stores.

That takeover resulted in redundancies and shop closures, including the company’s flagship Oxford Street store in London – but following a major turnaround, plans are in place to reopen it later this year.

Mr Putman’s plan to buy Wilko is still “live”, a source familiar with the situation said, but the businessman is apparently struggling to nail down final funding for the deal.

Commenting on the news, Andy Prendergast, GMB National Secretary, said:  “Every single redundancy is a person who will wake up facing an uncertain future. This needs to be on the forefront of everyone’s minds.

“The reality is years of mismanagement have led us here.

“We are still doing everything we can secure a deal that would protect the majority of jobs and stores. But this will be of little comfort for those not knowing how they’ll pay their bills.”