Debenhams is to be wound down after JD Sports pulled out of rescue talks with the department store chain.
Debenhams said it would continue to trade for now, in order to clear stock as administrators seek a buyer for all or parts of the business - with 12,000 jobs now at risk.
'A wind-down of Debenhams'
A statement from Debenhams said: "The sale process has not resulted in a deliverable proposal.
"Given the current trading environment and the likely prolonged effects of the COVID-19 pandemic, the outlook for a restructured operation is highly uncertain.
"The administrators have therefore regretfully concluded that they should commence a wind-down of Debenhams UK, whilst continuing to seek offers for all or parts of the business."
The department store had been considering a potential sale of the company since summer, after it went into administration in April, for the second time in a year.
JD Sports and Debenhams had reportedly been closing in on a deal, but retail giant Arcadia entered into administration on Monday (30 Nov), contributing to JD Sports’ change of mind.
The Arcadia Group owns brands including Topshop, Wallis and Miss Selfridge, and has 444 stores in the UK, as well as 22 overseas. A total of 13,000 jobs are now at risk.
JD Sports saw a sharp decline in its share price last week, with millions of pounds wiped off the company’s value when news of the potential purchase of Debenhams emerged. However, this then rebounded on 30 November, following reports that the deal may not go ahead, with a near six per cent rise in JD’s share price.
In a statement to investors, the sports retail chain said, "JD Sports Fashion, the leading retailer of sports, fashion and outdoor brands, confirms that discussions with the administrators of Debenhams regarding a potential acquisition of the UK business have now been terminated."
Mike Ashley’s Frasers Group could potentially seek a deal, but if no buyer is found, a liquidation of the UK business will take place, which will result in the closure of 124 UK stores and the loss of the workforce.
However, administrators assured suppliers and other creditors that all contractural obligations would still be met in full.