Debenhams is to be wound down after JD Sports pulled out of talks on a rescue takeover, placing 12,000 jobs at risk in a horror week for UK retail.
The decision was taken after a sale process, initiated by administrators when the troubled 242-year old department store collapsed in April, was officially concluded leaving it on the brink of liquidation.
Debenhams said it would continue to trade, for now, to clear stock as administrators seek a buyer for all or parts of the UK business.
Its statement read: “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.”
Sportswear chain JD was spooked by the demise on Monday night of Debenhams’ biggest supplier, Sir Philip Green’s Arcadia Group, while there was also unease over a deal among JD’s shareholders.
Sky News had reported in August that the hedge fund owners of Debenhams had drafted advisers from Hilco, a restructuring specialist, to work on a possible liquidation if administrators judged it was unable to trade solvently.
A liquidation of the UK business will take place if no buyer is found, resulting in 124 UK stores closing and the workforce being lost.
Administrators assured suppliers and other creditors, including landlords, that all contractural obligations would be met in full.
Debenhams’ problems precede the coronavirus crisis that has devastated the high street with a Sky News tracker showing the retail and hospitality sectors taking the biggest hits in terms of employment.
The decision to wind the company down presents an opportunity for rivals to snap up at least some of the stores and Debenhams’ online operation.
House of Fraser and Sports Direct tycoon Mike Ashley would be a likely candidate to seek a deal – potentially saving some of the threatened jobs.
His Frasers Group was the biggest shareholder in Debenhams when it collapsed in the spring of last year after spurning Mr Ashley’s bid to take control of the business.
His holding was ultimately wiped out.
The billionaire has also expressed an interest in Arcadia.
Are you a Debenhams worker affected by this news? Get in touch with Sky News
:: Email – firstname.lastname@example.org
:: ‘Your Report’ on Sky News apps