Debenhams will begin to “wind down” operations after JD Sports pulled out of rescue talks, putting 12,000 jobs at risk.

JD Sports was the last remaining bidder for Debenhams, which has been in administration since April. It comes after the collapse of Arcadia, which sold clothes through own brands within the department store, on Monday night.

On Tuesday, Debenhams confirmed it was to start winding down its operations “while continuing to seek offers for all or parts of the business”. 

In a brief statement to the London Stock Exchange, JD Sports said: “JD Sports Fashion, the leading retailer of sports, fashion and outdoor brands, confirms that discussions with the administrators of Debenhams regarding a potential acquisition of the UK business have now been terminated.”

Debenhams has already slashed 6,500 jobs across its operation due to heavy cost-cutting after it entered administration for the second time in 12 months.

It is understood that the collapse of the deal is partly linked to the administration of Arcadia, which owns brands including Topshop and Topman and is the biggest operator within Debenhams’ own stores.

Arcadia tumbled into insolvency on Monday evening, casting a shadow over its own 13,000 workers and 444 stores.

The Prime Minister’s official spokesman said the government remained committed to supporting the retail sector following the news.

He said: “We obviously understand it’s a deeply worrying time for Debenhams’ staff, the employees themselves and their families.

“We obviously stand ready to support them and we remain committed to supporting the retail sector and are working closely with industry during these very challenging times.”