JD Sports has pulled out of rescue talks for troubled department store chain Debenhams, putting 12,000 workers at risk.

It was the last remaining bidder for Debenhams which has been in administration since April.

In a brief statement to the London Stock Exchange, the company 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."

The 242-year-old department store chain said its administrators have "regretfully" decided to start its liquidation process, while continuing to seek offers.

"On conclusion of this process, if no alternative offers have been received, the UK operations will close," the company said in statement.

Geoff Rowley of FRP Advisory, joint administrator to Debenhams and partner at FRP, said: "All reasonable steps were taken to complete a transaction that would secure the future of Debenhams.

"However, the economic landscape is extremely challenging and, coupled with the uncertainty facing the UK retail industry, a viable deal could not be reached.

"The decision to move forward with a closure programme has been carefully assessed and, while we remain hopeful that alternative proposals for the business may yet be received, we deeply regret that circumstances force us to commence this course of action.

"We are very grateful for the efforts of the management team and staff who have worked so hard throughout the most difficult of circumstances to keep the business trading."

Debenhams said it will continue to trade through its 124 UK stores – including Wrexham, Llandudno, Bangor and Chester – and online to clear its current and contracted stocks.

The retailer has already cut 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 is the biggest operator of concessions in Debenhams stores.

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