JJB Sports' survival was under further threat yesterday after credit insurers withdrew cover to its suppliers, sending its shares to a record low.

Coface, Britain's third-largest credit insurer, said that it would not protect suppliers to JJB Sports from losses arising from the sportswear chain's collapse.

Euler Hermes, Britain's largest credit insurer, has removed some cover, it is understood. JJB is in talks with Atradius, the second-biggest credit insurer, in an attempt to avoid having its suppliers' insurance cut. A spokesman for Coface said that removal of cover was considered only as a last resort.

JJB Sports was rocked by allegations from its bank just over a week ago that it had broken its banking covenants — a charge denied by JJB. The disclosure prompted Deloitte & Touche, its auditors, to say that there was “material uncertainty” over JJB's future as a going concern.

JJB also announced a £10million loss in the six months to July 27, compared with profits of £8.3million a year ago. It axed its interim dividends and analysts halved their forecasts for full-year profits. Yesterday, shares in JJB fell 9p to 26p, their lowest since the company floated in 1994. The shares lost nearly half their value in late September. They are now worth 15 per cent of their value at their 174p year-high in December.

Louise Richardson, of Arden Partners, said: “Suppliers are likely to demand better terms, which could include up-front payments.”

David Stoddart, an Altium Securities analyst, said that the loss of credit insurance cover would increase the short-term financial pressure on JJB, adding that the company was already paying 3.25 per cent above Libor on its borrowings.

A spokesman for JJB, which has 400 stores, said that the company would not comment on the actions of the credit insurers. He added: “So far, there has been no effect on JJB's business.”

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