Peacocks, the debt-laden discount clothing retailer, yesterday filed a notice of intention to appoint administrators, threatening up to 11,000 jobs
in what would be sector's biggest collapse since Woolworths in 2008.
The fashion group's stablemate chain for older women, Bonmarché, which has 394 stores and employs 2,000 staff, has also served a similar notice, and is likely to be snapped up for less than £10m.
The Peacock Group said that it had entered into "exclusive discussions with a potential purchaser" of Bonmarché, which is believed to be Sun European Partners.
The private equity firm is set to buy the chain possibly through a pre-packaged administration later this week. But the management of Peacocks now has just 10 days to find new investment to safeguard the future of the 611-store retailer, which employs 9,000 people and is burdened by £240m of net debt.
Even if a rescue deal can be hammered out for Peacocks, large swathes of shops could still close. While neither Peacocks nor Bonmarché are yet in administration, it now seems almost certain that both will have to go through some form of insolvency process to survive.
In terms of job losses, this would make the combined failure of the two retailers the biggest since the administration of Woolworths saw 30,000 staff lose their jobs in January 2009.
Peacocks has been in talks with its group of lenders for weeks about restructuring its debts. A debt-for-equity swap was considered a likely outcome until the weekend. But Royal Bank of Scotland (RBS), which holds 17 per cent of the net debt in Peacocks, brought the situation to a head by walking away from refinancing talks.
A Peacock Group spokesman said: "Unfortunately these talks have now concluded and no agreement has been reached. However, discussions with other potential investors are ongoing."
He confirmed that to protect the business while discussions with such investors are continuing, the group has filed a notice of intention to appoint KPMG as administrator.