Debenhams is to start a liquidation process after JD Sports confirmed it had pulled out of a possible rescue deal, putting 12,000 workers at risk.
The 242-year-old department store chain said its administrators have "regretfully" decided to start winding down operations while continuing to seek offers "for all or parts of the business".
It is understood that the collapse of rescue talks were partly linked to the administration of Arcadia Group, which is the biggest operator of concessions in Debenhams stores.
Debenhams said it will continue to trade through its 124 UK stores and online to clear its current and contracted stocks.
"On conclusion of this process, if no alternative offers have been received, the UK operations will close," the company said in statement.
Geoff Rowley, of FRP Advisory, joint administrator to Debenhams, 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."
JD Sports was the last remaining bidder for Debenhams, which has been in administration since April.
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."
Sources close to JD Sports said the retailer saw a potential deal for Debenhams as "50-50" last week after entering exclusive talks with the high street stalwart.
However, it is understood that concerns over JD's lack of experience in running department stores and a shareholder backlash, which saw shares tumble after talks were first confirmed, contributed to the group backing out of a potential deal.
Debenhams has already axed 6,500 jobs across its operation due to heavy cost-cutting after it entered administration for the second time in 12 months.
Arcadia tumbled into insolvency on Monday evening, casting a shadow over its own 13,000 workers and 444 stores.
Paddy Lillis, general secretary at the Usdaw retail union, said: "It is devastating news for our high streets that Debenhams' administrators have announced a closure programme.
"Throughout Debenhams' difficulties the company and then administrators have refused to engage with Usdaw, the staff are being treated appallingly, and we don't believe the law has been complied with in the past.
"Over 200,000 retail job losses and 20,000 store closures this year are absolutely devastating and lay bare the scale of the challenge the industry faces."