Convenience chain McColl's has gone bust putting 1,100 shops and 16,000 jobs at risk.
The retailer confirmed the news and will appoint administrators.
McColl's said discussions with its lenders collapsed on Friday as creditors refused to extend a deadline for the retailer to find more cash.
Supermarket giant Morrisons, which is a major wholesale partner, also tabled a last-ditch effort to buy the business.
However, the company confirmed "the lenders made clear that they were not satisfied that such discussions would reach an outcome acceptable to them".
McColl's have appointed PriceWaterhouseCoopers as administrators after being "left with no choice" but to put the firm into administration.
The company said in a statement to the London Stock Exchange: "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."
McColl's will apply to the court later today to appoint the administrators.
It is understood that Morrisons is still interested in a takeover, while Sky News has reported that forecourt giant EG Group is interested in a deal.
Earlier on Friday, Morrisons tabled a rescue deal which would also take on the business as a going concern, absorb its debts of over £100 million and take responsibility for the company's pension scheme.
The two businesses are major partners, with McColl's operating hundreds of convenience shops under the Morrisons Daily brand.
McColl's has struggled financially in recent years after witnessing soaring costs due to supply chain disruption, inflation and its large debt burden.
On Thursday evening, McColl's had said it was in talks over "potential financing solutions" to resolve its funding issues.
Shares in McColl's were suspended earlier this week after the company delayed the publication of its latest financial results due to its financing talks.
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