Blacks Leisure Group appeared to be in disarray last week after its second failure to attract the interest of any potential investors, like one year ago. Speculation is mounting that the debt-ridden owner of the Blacks and Millets outdoor retail chains in the U.K. would have to go into pre-packaged administration, a form of bankruptcy, with stores and other assets to be split among different rivals. With the share price down to only 1.25 pence, the company is now worth less than £150,000 (€180,000-$230,000)on the London Stock Exchange.

Blacks put itself up for sale earlier this month to avoid collapse as its sales deteriorated and it failed to secure extra funding from its shareholders. It commissioned KPMG to gather bids by Dec. 22, but none came through. Thus, on Dec. 23, Blacks announced that the group's takeover panel had put an end to the bidding period, as no offer had come in at that point. It said, however that it will continue to discuss a possible sale with selected interested parties in January. It said that it remained in constructive discussions with Bank of Scotland, its major lender.

Blacks, which urgently needs a cash injection, had stated earlier this month that Sports Direct International (SDI), the leading British sports retailer and wholesaler, had expressed interest in acquiring it. However, this hope was dashed three days later when SDI said that, after careful consideration, it had decided against an offer for Blacks. SDI, which raised its stake in Blacks to 22.48 percent earlier this month, said it would remain a supportive shareholder.

Other parties that were said to have shown interest in Blacks have so far failed to come forward with any bid. The companies reported to have studied a takeover include Go Outdoors, Mountain Warehouse and Lion Capital, the owner of Cotswold Outdoor and the leading outdoor retailers in Belgium and the Netherlands. Hilco, a restructuring specialist, was reported by The Sunday Telegraph to have entered the fray as well. Another name mentioned in the press was that of Edinburgh Woollen Mills which seemed interested in buying some of Blacks' stores. Earlier this year it had already acquired the troubled Jane Norman chain.

SDI had previously controlled up to 28.5 percent of the outdoor retailer, but its stake was diluted last year when a simple majority of Blacks' shareholders decided to launch a share issue that raised £19.7 million (€23.3m- $30.8m). Efforts by SDI to increase its stake again at the time, possibly leading to majority control, were thwarted by investments made by Pentland Group and VF Corporation, which acquired 5.86 percent and less than 5 percent of Blacks, respectively.

VF, parent company of The North Face, and Pentland, which owns Berghaus and controls the JD Sports Fashion retail group, have been critical of SDI's investments in Blacks, fearing that its discount orientation would damage Blacks' image. SDI, which took over the Field & Trek chain in 2007, has been reported lately by the Financial Times to have proposed a sort of joint venture with Blacks, suggesting that it could share its warehousing and IT facilities in return for a management fee.

Pentland's stake remained at 5.86 percent. On the other hand, other investors stepped in last week including Richard Griffiths with a 5.95 percent stake, Henderson Global Investors with 7.66 percent of the capital, Shroders with 8.95 percent, and a certain Franco Scolaro with more than 10 percent.

It could not be determined whether any of these shareholders were acting in behalf of Ashley or SDI or any other parties. Griffiths is chairman of Ora Capital. Vidacos Nominees, a subsidiary of Citigroup, made a similar move by crossing 5 percent of Black's threshold. Spreadex, an operator of sports, financial and other bets, increased its stake from some 7 percent to more than 8 percent.

This would probably lead to the closure of the company's head office and distribution center, as well as the weakest of its 306 Blacks and Millets stores. Blacks could also try to obtain a company voluntary arrangement (CVA), which would allow it to write off some of its £36 million (€43.0-$56.1m) in debt and make it more enticing for buyers (more in SGI Europe, our sister publication).

In general, the overall retail situation has been extremely challenging in the U.K. lately. A few days ago, tBarratts Priceless Group, a major British chain of shoe shops, went to into the equivalent of Chapter 11 bankruptcy, and its administrators shut down 18 stores, axing 127 jobs in the shops and 43 at the headquarters. The receivers a&re trying to go on with the company's other 173 doors while seeking buyers for the chain, which has suffered from a difficult economic environment and warm weather conditions this winter. Barratts Priceless went into receivership on Dec. 8 for the second time within three years (more in Shoe Intelligence).