HMV owner Doug Putman has pulled out of a rescue deal for Wilko, throwing into doubt the future prospects of thousands of jobs.
The billionaire was understood to be in discussions with PwC, the administrator appointed to oversee the high-street chain's insolvency, to save around 200 Wilko shops.
But in a statement Mr Putman said the deal was now dead as a "stable foundation could not be secured to ensure long-term success for the business and its people in the way that we would have wanted".
"It is with great disappointment that we can no longer continue in the purchase process for Wilko having worked with administrators and suppliers over several weeks to seek a viable way to rescue it as a going concern," he said.
"We had financing in place and received the full support of PwC, Wilko management and staff representatives, which we are deeply thankful for considering what a challenging time it has been for them."
Discussions are reportedly taking place with other high street chains, including The Range, Poundland and Home Bargains, over potentially buying the Wilko brand or stores.
Last week, Wilko, which employed around 12,500 staff, announced a £13 million deal to sell 51 shops to B&M, although the rival discounter has not agreed to take on Wilko workers as part of the deal.
Administrators have already announced more than 1,600 redundancies at Wilko in recent weeks.
The retailer will this week shut 52 shops in a move which will lead to 1,016 redundancies.
Wilko said 24 of its shops will close on Tuesday September 12, with a further 28 shops due to shut on Thursday September 14.
PwC has also announced hundreds of redundancies affecting workers at the firm's warehouses in Worksop and Newport, as well as cuts at its support centre.
The company entered administration in August, having faced five years of declining turnover as high streets were placed under pressure, not least by the Covid-19 lockdowns.
Wilko was founded in Leicester with the first shop opening in 1930, and since then has grown to more than 400 stores across the country.
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