U.K. retailer British Home Stores (BHS) is to enter administration Monday, according to statements given by company representatives to media organizations. The move will put 11,000 jobs at risk, according to reports.
Talks between the struggling retailer and Sports Direct, another U.K. retail chain, about a possible sale of some of the company's 164 stores collapsed over the weekend, leading to Monday's announcement.
The key issue that reportedly led to the collapse of the talks was BHS' 571 million pound ($823 million) pension deficit, which Sports Direct was unwilling to take on in the event of any buyout.
In a letter sent to staff Sunday night, reported by the BBC, BHS owner Dominic Chappell said: "It is with a deep heart that I have to report, despite a massive effort from the team, we have been unable to secure a funder or a trade sale."
"I would like to say it has been a real pleasure working with all of you on the BHS project, one I will never forget. You all need to keep your heads held high, you all have done a great job, but remember that it was always going to be very, very hard to turn around,” he added.
Chappell lead the Retail Acquisitions consortium that purchased BHS from retail mogul Sir Philip Green for 1 pound ($1.44) last year, promising to bring investment of 160 million pounds ($230 million) to the struggling retailer. The group, however, was unable to secure the investment it promised, after dealing with steadily falling sales.
The restructuring firm Duff & Phelps is set to be named as administrator, and it is expected to try to find a buyer for the business as a going concern, according to the Guardian. Going into administration does not mean that all the chain's stores will close immediately, but it means a buyer is being actively sought.
If BHS collapses, it would be the largest retail failure in the country since Woolworths, another mass-market retailer, went under in 2008, with the loss of 30,000 jobs.
David Gill, national officer of shopworkers' union USDAW, told Sky News he was "very concerned" about the situation at the retailer. The letter to staff reportedly told them that their wages for this month would be paid by the administrator.
Analysts suggested that the move into administration meant profitable stores would be sold off on a piecemeal basis, and that the BHS brand would likely cease to exist.