The retailer insisted no decision had been made and it was still in talks to secure emergency cash to keep it afloat.
A collapse would make it one of the largest retail insolvencies since Debenhams and Sir Philip Green’s fashion chains including Topshop went bust.
McColl’s has 1,100 corner shops and newsagents across the UK and employs 16,000 people.
More than 200 of its stores trade under the Morrisons Daily brand, with the supermarket said to be keeping a close eye on its rescue talks.
McColl’s has been in talks with lenders about a deal after it was hit by supply chain issues and rising inflation.
It raised £30m from shareholders in a cash call just eight months ago.
Earlier this week the retailer warned its shares were set to be suspended because it could not get its accounts signed off by auditors.
McColl’s said the objective of an administration would be to secure a sale of the business and “secure the interests of creditors and employees”.
An administration could also mean that pensioners will be disadvantaged as well as current employees, sources said.
The news, first reported by Sky News, came in response to media speculation about its future.
McColl’s had to grapple with product shortages towards the end of last year, which weighed on the day-to-day costs of the business. It was also hammered by the shortage of lorry drivers and warehouse workers.
The company added: “We remain in discussions regarding potential financing solutions for the business to resolve short term funding issues and create a stable platform for the business going forward.”
When Debenhams went bust after last-ditch efforts to rescue the ailing store chain, 12,000 jobs were affected. Sir Philip Green’s retail business Arcadia employed 13,000 staff when it went into administration.