The potential collapse of Sir Philip Green’s empire threatens a domino effect on the high street, with JD Sports’ rescue of Debenhams now in peril.
JD Sports is backing away from talks with Debenhams administrators after an exclusivity period ended without an agreement to salvage the department store.
Arcadia is the department store’s biggest concession holder and its potential collapse next week has cast a shadow over discussions to save Debenhams, according to City sources.
Despite JD Sports no longer being in exclusive discussions, sources close to the FTSE 100 retailer insisted it had not withdrawn completely from the process.
Debenhams was owned by a consortium of hedge fund lenders until it went bust for the second time in a year, in April. It employs 12,000 people across 124 stores.
The cooling of discussions between administrators and JD Sports raises the spectre of liquidation. The specialist firm Hilco, which is linked to Sir Philip, has been lined up to handle a potential winding-down of the business.
Alternatively, the developments could push Debenhams into the hands of the Sports Direct tycoon Mike Ashley, who has made a series of bids.
He invested at least £150m in the chain when its shares traded on the stock exchange, which was wiped out the first time it went bust.
On Saturday Mr Ashley offered a £50m emergency loan to save Arcadia from administration, it emerged on Saturday.
It entered into exclusive talks with Debenhams adviser Lazard, the investment bank, and its administrator FRP Advisory last week.
Debenhams and JD Sports declined to comment.