Convenience chain McColl's (MCLS.L) has confirmed that it has gone bust and will appoint administrators, putting 1,100 shops and 16,000 jobs at risk.
It comes after Morrisons tabled a last-minute rescue deal to save the firm and approached PriceWaterhouseCoopers, who are advising lenders to McColl's.
The retail group said it was “increasingly likely” it would have to call in administrators if last minute talks to secure a rescue deal were unsuccessful.
McColl’s operates more than 1,100 corner shops and newsagents across the UK under the McColl’s, RS McColl and Morrisons Daily brands.
It has been in talks with lenders about a deal after it was hit by supply chain issues and rising inflation.
This Friday afternoon, it the company's lenders did not want to extend banking agreements that were keeping the business going.
Read more: Is the UK heading into a recession?
Accountancy firm PriceWaterhouseCoopers has been appointed as administrators and will look for a buyer "as soon as possible".
McColl's said in a statement: "In order to protect creditors, preserve the future of the business and to protect the interests of employees, the board was regrettably therefore left with no choice other than to place the company in administration, appointing PriceWaterhouseCoopers as administrators, in the expectation that they intend to implement a sale of the business to a third-party purchaser as soon as possible."
The shares fell 7% to around 1p but recovered on the back of a possible rescue deal.
McColl’s found it hard to compete with larger players such as Tesco (TSCO.L), Sainsbury's (SBRY.L) and Co-op and struggled to thrive during the pandemic even as families chose to shop closer to home and avoid large supermarkets.
Morrison’s has been touted as a potential buyer of McColl’s assets, having previously withdrawn from operating convenience stores directly.
McColl's successfully raised £30m from shareholders last year to invest in driving the expansion of its Morrisons Daily convenience stores.