Debenhams’ lenders are expected to take control of the department store group after conditions for further funding were not met and no deal was struck with potential buyer Sports Direct.

Debenhams said that it is still in discussions with its lenders about access to funding, the final tranche of which had been dependent upon a sale to or financing agreement under specified conditions to Sports Direct.

However, Debenhams said: “As a result of the milestones relating to a potential transaction with [Sports Direct] not having been met, it is likely that these facilities will now only be available to the group’s subsidiaries upon transfer of those subsidiaries into the ownership of a lender-approved entity.”

Debenhams has asked for its shares to be suspended. A pre-pack administration is now likely, and further details are expected later today.

That will wipe out equity shareholders including Sports Direct, which is Debenhams’ biggest investor.

Sports Direct said today that it had made a revised offer overnight to underwrite £200m of new equity if lenders agreed to write off £82m of Debenhams’ £720m debts, conditional upon Sports Direct founder Mike Ashley becoming chief executive of Debenhams.

However, Debenhams said its lenders said the Sports Direct proposal, “on the terms set out”, was not sufficient to justify an extension to yesterday’s funding deadline.

Debenhams said that the transfer of ownership to lenders “would ensure the stability and continuing trading of the group’s operating subsidiaries, with no disruption to the group’s business, customers, employees, pension-holders, suppliers or operations”.

Sports Direct said it was still considering a possible offer for Debenhams at 5p per share.