JJB Sports is poised to fall into administration, putting thousands of jobs at risk, after shares in the Aim-traded sports retailer were suspended on Monday.
The company said it expected to appoint KPMG as administrator, ahead of a deal to salvage part of the business in the coming days.
JJB said it hoped “to be in a position to announce a sale of the trade, assets and brands of the group within the next few days”.
Any sale is likely to be by way of a “pre-pack” administration – the pre-negotiated sale of an insolvent business.
Sports Direct, the sportswear retailer controlled by Mike Ashley, is the frontrunner to buy some of the stores under the pre-pack deal. However, it is not expected to take all of JJB’s 180 stores, which employ more than 4,000 staff.
Mr Ashley could face competition issues. He is the owner of Newcastle United Football Club, while his Sports Direct is a market leader in UK sportswear retailing.
However, people familiar with the situation have suggested that Mr Ashley is not JJB’s only option.
Stafford Group, the privately owned Irish conglomerate and sporting chain owner, entered the race last week. GA Europe, the retail restructuring firm, also submitted a first round bid.
However, JD Sports, which was seen as another potentially interested party, pulled out of the bidding last week.
No interested party wants to take all of the stores, preferring instead to cherry pick the best assets.
The administration of JJB would be the latest casualty to hit Britain’s battered high street.
Clinton Cards went into administration in May, while value fashion chain Peacocks collapsed in January. Blacks Leisure, the outdoor pursuits clothing retailer, was acquired by JD Sports, also in January, by way of a pre-pack administration.
JJB put itself on the block in August after a series of unsuccessful attempts to turn round the business.
However, JJB on Monday said that although it had received offers for parts of the business, no offer had been made for the group as a whole, which the retailer said was likely to leave its shares worthless.
The shares, which traded above £10 in 2008, were suspended on Monday at 0.4p.
JJB said: “The offers received include offers to acquire certain of or substantially all of the trade, assets and brands of the group. However, the board notes that it does not have and does not now expect to receive an offer for the shares of JJB.”
KPMG is expected to be appointed administrator in an effort to recoup some value for shareholders, who have seen JJB struggle through two company voluntary arrangements and emergency fundraisings in attempts to survive.