First Quench, the owner of the Threshers and Wine Rack off-licence chains, faces entering administration, and rendering thousands of employees redundant.
Insolvency practitioners at KPMG are working to find a solution for the business, and options include a sale, a pre-pack administration or a company voluntary arrangement.
The retailer, which has 6,500 mainly part-time staff, had a
turnaround plan, including cost saving, cutting back on stock and closing under-performing stores.
Over the past four years, numerous stores have been sold via auction to private investors, and a pre-pack administration would hit smaller landlords much harder than larger investors. It is believed that recently-hired non-executive director John Cleland, the former chief operating officer of Somerfield, is preparing a plan to purchase the business.
At the beginning of the year, First Quench warned that it might not be possible to continue as a going concern due to falling sales and the withdrawal of credit insurance. It also indicated that store closures would become inevitable if it was unable to renegotiate rents with its landlords.
The company has also suffered from several senior executives leaving the business and supply chain issues that has impacted on stock levels. Early on in October it was reported that First Quench's acting chief executive Martin Healy resigned 'to pursue other business interests'.
