High street store Woolworths' retail division is poised to go into administration later today, a company source said.
The ailing firm's distribution arm Entertainment UK will also go into administration under the plans due to be discussed by Woolworths' board tonight.
Woolworths group will not go into administration, however, as its Bertram Books and 2 Entertain - a publishing joint venture with BBC Worldwide - are self-funding.
A source close to the negotiations said: "The board of Woolworths retail and Entertainment UK have resolved to take the necessary steps to enter into administration late this evening."
He said it was not known when a formal announcement would be made.
Ardeshir Naghshineh, who owns 10 per cent of Woolworths shares, said he was "deeply disappointed" by the news.
"I am also deeply disappointed that the Woolworths board was not prepared to enter meaningful discussions with us despite intensive attempts by us to obtain information from them," he said.
"We are still interested in pursuing a future for the businesses which are in administration and will be seeking discussions with the administrators."
John Gorle, national officer of the shopworkers' union Usdaw said the news was "devastating" for the staff, adding: "We were hopeful that a last minute deal would be done. We will want to meet with the administrators as soon as possible."
The news came after shares in the high street retailer were suspended as talks continued over rescue plans.
The ailing firm - in business for almost a century - said it was in discussions over the potential sale of its retail outlets and its 40 per cent stake in the 2 Entertain publishing joint venture with BBC Worldwide.
But Woolworths added that both deals were subject to the approval of its banks and said "there can no assurance" that the sales would be completed.
Woolworths' crisis talks come as reports suggested furniture company MFI was in danger of going into administration.
MFI - which has been hit by the housing downturn - employs more than 1,000 people and runs 110 stores across the UK.
Woolworths, which has around 800 outlets, confirmed that BBC Worldwide was the potential buyer of its stake in 2 Entertain.
The firm added: "Pending the outcome of these discussions and the consequent impact on the company's financial position, the company has requested a suspension of the trading of its shares on the London Stock Exchange."
Woolworths opened its first store in 1909 in Liverpool and has 30,000 staff.
But the firm has seen shares crash 90 per cent over the past year to stand at just 1.35p as fears over the business grow.
Restructuring specialist Hilco is said to have made an approach to buy the retail business for a nominal £1 and assume a large share of Woolworths' debt.
Woolies' net debt stood at £294.5 million at the beginning of August after a six-month trading period in which it made pre-tax losses of £99.7 million.
Any rescue deal is likely to depend on how tough a line is taken by the firm's syndicate of lenders, led by Bank of Ireland subsidiary Burdale Financial and GMAC Commercial.
While sale talks were being pursued "with vigour", Woolworths added: "Both sales are subject, amongst other things, to the approval of the group's lending banks."
Hilco is well known in UK retail circles after buying fashion chain MK One this year and subsequently placing it into administration.
It also bought up the debt of Allders in 2005 before the department store chain went into administration. Hilco said its actions, including the provision of £15 million of additional working capital, meant 30 Allders stores were sold and 3,500 jobs saved.Reuse content