Thousands of jobs under threat as JJB eyes administration

JJB Sports, the beleaguered sports equipment retailer, is expected to file for administration this coming week, putting thousands of jobs at risk.

The sportswear giant Sports Direct, which is controlled by its founder Mike Ashley, the owner of football club Newcastle United, is understood to be the front runner to acquire part of JJB out of pre-packaged administration. But the market leader is understood to be only interested in buying less than 50 of JJB's 180 stores. This is likely to lead to the closure of more than 100 shops and hefty job losses among the Wigan-based chain's 4,000 staff.

JJB has lurched from one crisis to another over the past four years, despite implementing two insolvency procedures and investors pumping into the business £225m-plus of funding.

Sports Direct is only interested in acquiring a limited number of JJB's stores, as only a handful make any sort of profit. Furthermore, the Office of Fair Trading will almost certainly examine any deal that Sports Direct strikes with JJB on competition grounds at a local store level.

If, as expected, JJB does file a notice of intention to appoint administrators this week, it will then have a maximum of 10 working days to secure a rescue deal.

However, part of the retailer – which has debts of £16.5m with Lloyds Banking Group – is likely to be rescued through a pre-packaged administration, which would allow a new owner to buy it out of technical insolvency with fewer stores and lower debts. KPMG is thought to have been lined up as administrator, although it is possible another accountancy firm could be used.

JJB said on Thursday that "a number of parties have submitted offers to acquire the whole or substantially all of the business and assets of the group". It also warned that shareholders are likely to be wiped out. JJB's shares closed at 0.375p yesterday.

While Sports Direct is tipped to win the day, rival JD Sports Fashion is thought to have requested information on JJB. US sports equipment chain Dick's Sporting Goods, which owns 3 per cent of the UK retailer, is also still thought to be considering a bid for part of JJB.

All parties declined to comment.