Blacks Leisure fuelled speculation today that it would go into administration in a move which would allow rivals to cherry-pick its best assets.
The outdoor clothing group, which owns 98 Blacks outlets and 208 Millets stores, signalled a so-called pre-pack deal was on the cards as it said it did not expect an offer for the group's shares, only for its trade, assets and brands.
Blacks, which also owns brands Peter Storm and Eurohike, said discussions continue with interested buyers, understood to include Scottish clothing group Edinburgh Woollen Mill and Mountain Warehouse, with a view to securing the future of the business by next month.
The loss-making group, which employs 3,600 staff in outlets and at its head office and distribution centre in Northamptonshire, put itself up for sale after failing to secure extra funding to turn around the business.
Shares in Blacks Leisure fell more than 40% after the update, and have fallen more than 97% since the start of the year, giving the company a market value of less than £1 million.
A pre-pack administration is an insolvency procedure which sees a company being sold immediately after it has entered administration.
The process is viewed as controversial because creditors do not have the opportunity to vote against the proposed asset sale - although the swift sale of the assets is necessary to enable the best price to be achieved.
There had been concerns over the future of the stricken firm after its biggest shareholder Sports Direct walked away from buy-out talks, sparking fears of a lack of interest.
Sports Direct, which is owned by Newcastle United owner Mike Ashley, had been seen as the most likely to step in to rescue the ailing retailer, having already tried to buy the company last year.
But the company recently issued a statement confirming it had withdrawn an offer. However, whether the group will make a move on Blacks' assets if it falls into administration remains to be seen.
Blacks, which is in £36 million of debt, made a £16 million loss in the first half of the year and recently warned that its full-year performance would be worse than expected.
The group was hit by the warm weather in October and November as much of its clothing is aimed at harsher conditions, such as fleeces and waterproof jackets.