Administrators are set to be appointed for the business which has 1,100 stores.

EG Group had been poised to buy McColl’s but Morrisons tabled its 11th-hour improved offer on Sunday. Britain’s fourth biggest supermarket chain is offering to take on all the stores and staff.

Morrisons had already agreed to take on McColl’s debts, but it is now understood to be willing to pay McColl’s lenders in full, straightaway, matching a similar pledge thought to have been made by EG Group. Morrisons is also prepared to take on McColl’s pension commitments.

It is now thought EG’s rescue deal also includes the pensions scheme – bringing the offers neck and neck.

The trustees of the McColl’s pension schemes have written to the Business Secretary, Kwasi Kwarteng, urging him to do whatever he can to make sure pension scheme members are protected.

Morrisons is McColl’s key wholesale supplier. It has also formed a tie-up with the chain to convert hundreds of McColl’s shops to Morrisons Daily convenience stores. There are more than 200 now and these have been performing well.

Morrisons saw its earlier offer to take over the chain turned down on Friday. That set in motion the insolvency process, which is due to proceed in the courts.

McColl’s employs around 16,000 staff across the chain but only around 2,000 are in the two defined benefit pension schemes that are at risk.

EG Group already owns thousands of petrol stations, including forecourt shops, and other convenience stores in the UK, Ireland, Europe, Australia and the US – and is expected to retain McColl’s sites and staff.

McColl’s – which has 1,400 stores – said the company’s lenders did not want to extend banking agreements that were keeping the business going.

Accountancy firm PwC has been appointed as administrators and will look for a buyer “as soon as possible”.

Supermarket chain Morrisons proposed a rescue deal on Thursday to try to safeguard the chain.

Morrisons is already in a partnership with McColl’s, which operates more than 200 Morrisons Daily convenience stores.

However, McColl’s said that while discussions with Morrisons had “made significant progress”, its lenders had made clear they would not reach a conclusion that was acceptable to them.

“In order to protect creditors, preserve the future of the business and to protect the interests of employees, the board was regrettably therefore left with no choice other than to place the company in administration,” said McColl’s.

Asda co-owner EG Group, which is controlled by the billionaire Issa brothers, could strike a deal to rescue the bulk of the company, Sky New reported. EG Group declined to comment.

McColl’s raised £30m from shareholders last year to invest in expanding its Morrisons Daily convenience stores, but at the time it warned that footfall had been hit by the coronavirus pandemic.

McColl’s said it had asked for trading in its shares to remain suspended.

Morrisons had been talking to McColl’s and its creditors for a number of weeks as it aimed to thrash out a rescue.

After being knocked back Morrisons made an improved offer on Thursday evening which was thought to include taking on McColl’s pension commitments and its £170m debt.

Morrisons and McColl’s signed a deal five years ago which involved Morrisons being the convenience store chain’s sole supplier for grocery products, including the relaunched Safeway brand.

A spokesperson for McColl’s pension schemes called on bidders for the firm to “respect pension promises” made to 2,000 scheme members.

“The two pension schemes are relatively small compared to the McColl’s business, and funding them would clearly be manageable for the ongoing business, or for anyone who acquires it,” the spokesperson said.

A pre-pack administration – which allows an insolvent firm to sell assets to bidders – could break the link between the pensions schemes and the firm, they said.

Sky News reported that EG Group was preparing to take over McColl’s via a pre-pack administration.

This “would represent a serious breach of the pension promises made to staff who have served the business loyally over many years, and risks causing the schemes to enter the Pension Protection Fund with a resulting reduction in benefits,” the spokesperson said.

The Pension Protection Fund takes on certain types of pension scheme when an employer collapses.

The fund, which is paid for in part by a levy on other pension funds, pays pensioners and protects those yet to reach pensionable age.

Two related shopping centres, Magowan West in Portadown and Peacocks in Woking, are also in administration. The businesses are all associated with the Dungannon-based Moyallen Group.

David Warnock and Stephen Tennant of Grant Thornton have been appointed as joint administrators, the BBC said.

Stephen Cave, head of restructuring at Grant Thornton in Northern Ireland, said: “Our immediate priority has been to ensure the shopping centres continue to trade as normal under the ultimate control of the administrators, with no operational impact for tenants or shoppers.

“We have and will continue to liaise with key stakeholders, as we manage the position and consider future options.”

Rushmere is considered one of Northern Ireland’s better performing shopping centres, with a low vacancy rate.

However the most recent accounts for the company that holds Rushmere, Central Craigavon Ltd, show the value of centre had been sharply marked down.

The accounts for the year ending December 2019 show the property’s value had been revised down from £95m to £58m.

That meant it posted a pre-tax loss of £33m compared to a pre-tax profit of £8m in 2018.

Substantial borrowings from the Bank of Ireland are secured on the centre.

The 2019 accounts show that £98m was due to creditors within one year.

Those accounts also said the group’s directors had obtained the ongoing support of its bankers and accordingly the accounts were prepared on a going concern basis.