Insolvency company Kroll, which has taken charge of the bankrupt Allders department store chain, is in negotiations over plans to shut 35 of its 45 stores.

The administrators have officially closed off the option of selling the chain as a going concern, and are holding 'closing down' sales at 10 of its 45 store locations.

They stress that the closures strategy is the best way forward for both the company's creditors and its employees.

Reports at the weekend suggested that the 35 stores would be distributed to a group of competitors consisting of Debenhams, Primark and Bhs within a short space of time.

The Alchemy private equity group, which launched a £70 million takeover bid for the business, saw its offer turned down on Friday.

The Times newspaper revealed today that ex-Allders chief executive Harvey Lipsith, who left the company two years ago, has also launched a £50 million offer for 12 of the 35 store locations, with support from Sun Capital Partners.

Approximately 130 staff members were laid off from Allders' head office last week, including chief executive Terry Green, commercial director Phil Cox, and finance chief Harvey Ainley.

Green and Cox failed to turn the Allders business around after taking it private in a £160m deal two years ago. The retailer recorded a loss of £27m in 2004.