Around 12,000 jobs are at risk after JD Sports pulled out of rescue talks for beleaguered department store chain Debenhams.
The firm was the last remaining bidder for Debenhams, which has been in administration since April.
Debenhams has confirmed it will move ahead with plans to close its 124 UK stores unless a new buyer comes forward.
In a brief statement to the London Stock Exchange, the company said: "JD Sports Fashion, the leading retailer of sports, fashion and outdoor brands, confirms that discussions with the administrators of Debenhams regarding a potential acquisition of the UK business have now been terminated."
Debenhams has already cut 6,500 jobs across its operation due to heavy cost-cutting after it entered administration for the second time in 12 months.
It is understood that the collapse of the deal is partly linked to the administration of Arcadia, which is the biggest operator of concessions in Debenhams stores.
Debenhams says its administrators FRP Advisory have "regretfully concluded that they should commence a wind-down of Debenhams UK, whilst continuing to seek offers for all or parts of the business."
FRP had been enlisted to seek a buyer for all or part of the UK business or to carry out a further restructure of Debenhams’ operations to go forward on a standalone basis.
Now, Debenhams says that, given the current trading environment and the likely prolonged effects of the COVID-19 pandemic, the outlook for a restructured operation is highly uncertain, triggering a wind-up of the business.
Debenhams says it will continue to trade through its 124 UK stores and online to clear its current and contracted stocks.
After that, if no alternative offers have been received, the UK operations will close.
This does not impact Magasin du Nord in Denmark, which continues to operate independently.
Geoff Rowley of FRP Advisory, joint administrator to Debenhams and Partner at FRP, said: “All reasonable steps were taken to complete a transaction that would secure the future of Debenhams.
"However, the economic landscape is extremely challenging and, coupled with the uncertainty facing the UK retail industry, a viable deal could not be reached.
"The decision to move forward with a closure programme has been carefully assessed and, while we remain hopeful that alternative proposals for the business may yet be received, we deeply regret that circumstances force us to commence this course of action.
“We are very grateful for the efforts of the management team and staff who have worked so hard throughout the most difficult of circumstances to keep the business trading.
"We would also like to thank the landlords, suppliers and partners who have continued to work with Debenhams through this turbulent period and can reassure them that all contractual obligations entered into in the administration period will be met in full.”
Arcadia tumbled into insolvency on Monday evening, casting a shadow over its own 13,000 workers and 444 stores.
Chancellor Rishi Sunak said the Government "stands ready" to help workers affected by job losses at Arcadia and Debenhams.
Speaking in the Commons, Mr Sunak said: "The news about Arcadia, and indeed Debenhams, is deeply worrying for employees and their families and the Government stands ready to support them.
"With regard to various things that are ongoing, there are negotiations between various parties and the companies at the moment - particularly with regard to pensions - and it wouldn't be right for me to comment specifically on those.
"But she can be rest assured we keep an eye on the situation."
