Reliance Retail has pulled out of the race to buy Debenhams as the embattled department store chain battles to secure its future.

The Indian conglomerate, controlled by the country’s richest man Mukesh Ambani, had emerged as a surprise bidder for the retailer last month but has now dropped out of the auction.

A number of other parties remain interested in buying the business, according to The Sunday Times.

Debenhams, which employs around 12,000 workers and operates more than 100 stores across the UK, plunged into administration for the second time in a year in April.

There are fears the business will be liquidated if it fails to find a buyer. Debenhams’ owners, a group that includes American hedge funds and various lenders, are already said to have lined up restructuring firm Hilco to handle a potential liquidation process.

The department store chain has extended the vast majority of its leases in a bid to make the business a more attractive acquisition, though any new buyer would be able to close unprofitable sites while it remains in administration.

Debenhams chair Mark Gifford insisted in an interview with the BBC last month that its sales were “recovering” despite the impact of the pandemic and said potential suitors were running the rule over “available cost-saving opportunities so this business has a viable future”.

However, Gifford did concede that Debenhams was likely to remain in administration until early next year.

Its high street rival Edinburgh Woollen Mill filed a notice of intention to appoint administrators last week, putting a further 21,000 jobs at risk.

The group’s owner, Philip Day, is in talks with New York-based hedge fund Davidson Kempner over a potential stake in Peacocks, according to The Mail on Sunday.

Day’s fashion empire, which includes brands such as Jaeger and Austin Reed, has been hit by the coronavirus pandemic and a row with Bangladesh Garment Manufacturers and Exporters Association.

The organisation accused Edinburgh Woollen Mill of failing to pay £27m to suppliers in the country, a claim EWM rebuffed.

But the accusations unsettled credit insurers and prompted a reduction in cover for its suppliers.

Day is now said to be considering legal action against the association.