The group said that more than a third of its stores will close immediately, with the loss of up to 700 jobs, leaving it with just 147 outlets. It is understood that, last week, Arla Foods stopped supplying milk to the retailer, citing payment problems.
The retailer said in a statement last night: 'It is with regret that Kwik Save has had to make this difficult decision. However, in order to enable the business to succeed, the management team has had to announce these cutbacks to secure the future of the business.'
A spokesman for union Usdaw said: 'This is a huge number of closures that will affect many workers. We will be having an urgent meeting with the company to clarify what redundancy package workers can expect, as well as discussing the long-term future of the business.'
The closures also spell bad news for Somerfield owners Barclays Capital, private equity group Apax and property entrepreneur Robert Tchenguiz. The group sold Kwik Save after taking the business private two years ago, but it still owns some of the leases.