Neckermann, a German mail order company, will file for insolvency after its private equity owner Sun Capital Partners refused to inject more capital into the business.
The company, which sells household goods, has been in talks with staff representatives about a restructuring that could lead to 1,400 job losses as it seeks to close its catalogue business and sell only online. A collapse of the whole business puts 2,000 jobs at risk.
Last week, Neckermann said it didn't have the resources to pay compensation packages for the redundancies. A turnaround plan had been agreed between the management team and the trade union Verdi, but Sun Capital Partners did not approve it.
Sun Capital Partners was willing to stump up €25m for the business but the management team's plan required some €60m.
Neckermann's printing factory in Frankfurt, which was due to be closed under the proposed restructuring scheme, is owned by Segro, which said that the current occupier had paid rent until the end of July and that it was unlikely to find a new tenant in the short term.
The deal comes shortly after German drugstore Schlecker suffered a similar fate. Members of the Schlecker family, whose fortune has been wiped out, are under investigation for fraud and failing to report the insolvency in a timely manner.