Woolies shares are suspended and MFI fights for survival

With 30,000 staff fearing for their jobs and rumours of insolvency spreading across the City, the high street retailer confirmed week-old speculation that it was in talks about a sale of the business.

It came as furniture chain MFI, which operates more than 100 stores employing 1,500 staff, was also battling for survival in a bitter row over unpaid rents.

Woolworths is in desperate need of a cash injection and is said to be struggling to pay wages. The shares were suspended at 1.2p - a move aimed at giving it breathing space while it holds talks with banks and bidders.

The 800-strong retail store business for which Woolies is best known is in its 100th year. It could be sold to Hilco, a rescue specialist which would pay a nominal £1 for the business and take on chunks of a £385 million debt.

Meanwhile, the BBC has agreed to pay £100 million to buy out the 40 per cent of 2entertain that it does not already own. 2entertain is a joint venture with Woolworths which publishes DVDs including Doctor Who and Blue Planet.

The BBC deal would effectively see TV licence payers bailing out Woolworths. However, if Hilco refuses to agree to take on enough of the debts to keep the banks happy, then both deals will fail.

This would almost certainly push the company into bankruptcy. Woolworths has been a stalwart of the high street since 1909 when the first store opened in Liverpool. It remains the biggest seller of pick and mix sweets but has been hit by competition from supermarkets, WH Smith and the internet.

Although the stores remain open for business, critics say they lack focus and at their worst resemble jumble sales.

If the Hilco takeover goes through, brutal job losses are likely to follow. Woolworths today said of the possible sales: "While discussions in relation to such sales are being pursued with vigour, terms have not yet been agreed. Both sales are subject, among other things, to the approval of the group's lending banks."

Meanwhile if MFI cannot reach a deal with its landlords, then an administrator will be appointed to wind up the business. Its website was offering discounts of up to 70 per cent on furniture this morning.

All retailers have been hit hard by the recession. Furniture and electrical stores have suffered the most, as consumers delay or abandon plans to make "big ticket" purchases. Retail analysts in the City say the Bank of England was too slow to cut interest rates and must take some of the blame for the carnage on the high street.