Administrators of the Threshers and Wine Rack group today warned of store closures and jobs losses following the collapse of First Quench Retailing last night.
KPMG has already made 81 redundancies at the firm's head office in Welwyn Garden City and said it was likely further jobs would face the axe among the remaining 6,283-strong workforce.
"Unfortunately it is likely that some store closures and further redundancies will be made. Once the administrators have assessed the viability of each store, a further communication will be announced," said KPMG.
First Quench operates a total of 1,202 outlets under the Threshers and Wine Rack brands, as well as Bottoms Up, Victoria Wine and local convenience store chains The Local and Haddows.
But there are also another 86 stores - employing an estimated 430 staff - that are run as franchises and have not been placed in administration, as they operate as separate businesses owned by their own management.
KPMG confirmed none of the First Quench stores had closed yet and said it was running the business as a going concern in the hope of securing a buyer.
Threshers - founded in 1897 - was placed in administration late yesterday after struggling amid fierce competition for drink sales from superstores.
Richard Fleming, joint administrator and UK head of restructuring at KPMG, said: "Trading in the off licence sector has become increasingly competitive in recent years, with the recession proving too much of an additional burden in this case.
"The business has a comprehensive geographic footprint, however, and we believe this presents a compelling opportunity to other retailers who may wish to extend their reach.
"We will continue to trade the remaining business while we seek a buyer."
First Quench yesterday sought to assure staff - including around 3,000 full-time workers - that KPMG would seek to run the business as normal while seeking a buyer and said wages would be paid next week as planned.
It is understood the group had been looking at various options for the business in an attempt to stave off administration, including trying to find a buyer.
At the beginning of the year First Quench warned some of its stores would close if it was unable to renegotiate rents with landlords.
A turnaround plan was put in place, including cost savings, the closure of loss-making stores and cutting of stock.
First Quench is already said to have warned over its ability to continue as a going concern after the business was hit by declining demand and the withdrawal of credit insurance.
Its Threshers chain was founded 112 years ago by Samuel Thresher. It was bought by Flowers Breweries in the 1950s and became part of Whitbread - now owner of Premier Inn and Costa Coffee - in 1962.
Whitbread merged the off-licence chain with Allied Domecq's Victoria Wine in 1998 to create First Quench, which was bought by private equity firm Principal Finance Group for £225 million in 2000.