The administrator to Jane Norman has sold a third of the troubled women's fashion chain's stores to Edinburgh Woollen Mill, saving at least 396 jobs.
However, almost 400 jobs will be lost with the immediate closure of 33 stores and 750 further jobs remain under threat.
Edinburgh Mill, the privately-owned Scottish knitwear retailer, has the option to buy another 28 stores, which account for another 250 of Jane Norman's 1,600 jobs. Zolfo Cooper, the administrator, said Jane Norman's 90 concessions at Debenhams department stores would stay open while it tries to arrange a sale to a potential buyer, thought to be Debenhams.
About 500 people work at the Debenhams concessions and the company's head office, which will stay open in the short term.
The sale to Edinburgh Mill was made under a so-called pre-pack arrangement which allows an administrator to line up a buyer when a company is in trouble.
Jane Norman was weighed down by its £140m of debt from a group of up to 15 lenders. It put itself up for sale in May amid terrible trading conditions on the high street.
Alastair Beveridge, a partner at Zolfo Cooper, said: "It has been an exacting time for the company, which has a substantial amount of debt.
"Unfortunately, the sale has resulted in job losses, which we appreciate is difficult news for those involved."
The sale to Edinburgh Fashion Mill is the latest acquisition by the Dumfries-based company.
In the last 10 years it has escaped from its unfashionable image as a purveyor of tweeds and tartans for the older age bracket.
Its deals since the credit crunch have included buying the Rosebys and Ponden Mill home furnishing chains, rebranded as Ponden Home, and the Proquip golf wear brand.
Jane Norman was owned by Baugur, the defunct Icelandic retail empire, and Kaupthing, the collapsed Icelandic bank. After the Icelandic banking crisis, its lenders took control of 80 per cent of the company in a debt-for-equity swap.