The starting pistol was fired yesterday for the sale of Woolworths and MFI as the court-appointed managers sought buyers for the beleaguered stores.

Deloitte, the accountancy firm appointed to shepherd Woolworths through corporate bankruptcy, hoisted the “for sale” sign over its 815 stores and over EUK, a distributor of CDs, DVDs and games to retailers.

Menzies, the court-appointed administrator of the discount furniture chain MFI, which is in administration for the second time this year, tried to find buyers for its 111 stores.

The lenders behind heavily indebted businesses such as MFI and Woolworths usually wait until January to pull the plug to allow shops to take as much money as possible during the festive period. But, this year, Christmas trading is expected to be so bad that many lenders are getting in early.

The Icelandic Government will begin an auction of the investments owned by its nationalised banks in high-profile British stores at the end of February. Shares in some companies and cut-price debt in others will be up for sale as names including Hamley's and House of Fraser go on the block.

The Icelandic Government is expected to appoint an investment bank to run the auction early next year, although its central bank is already being advised by US bank JP Morgan.

Buyers in the City say that some companies owned by Baugue, the Icelandic retail investor, are already being offered for sale to beat the rush. Investors say they have been invited to bid for the ailing tea and coffee chain Whittard, and Whistles, the upmarket clothing chain. Baugur has always said its businesses are not for sale.

Neville Kahn, the Deloitte partner in charge of Woolworths' sale, said last night he had been approached by a number of potential buyers. One is the man who was Woolworths' biggest shareholder, Ardeshir Nagshineh, an Iranian property tycoon.

However, Mr Kahn, who is the court-appointed administrator, said that he had also received offers for smaller chunks of the portfolio from food retailers. It is thought that Tesco and Waitrose may want some of Woolworths' shops. Both bought leases from Woolworths this year. Mr Kahn said he had had significant interest in EUK from the company's rivals and from private equity bidders. He said breaking up the business could allow him to save more jobs.

He is under pressure from the Government to minimise job losses. Business Department officials are understood to have been in touch with Deloitte to ask it to do its best to keep the stores trading during the Christmas period.

Mr Kahn said yesterday that all 25,000 employees in work in Woolworths' stores will keep their jobs until Christmas Day at least.

Baroness Vadera, a Business Minister, intervened in the stand-off between Woolworths and its banks early this week to try to prevent an administration. The Prime Minister offered further help for staff yesterday. “The important thing is in the long run that employees in this company - where the businesses and the shops are not going to stay open in the longer term - can get other jobs quickly,” Gordon Brown said. “That's why we're going to move in immediately to give advice to employees.”

Promising help and advice over alternative jobs, officials from the Business Department urged the administrators to ensure that wages were still paid to staff and that Christmas gift tokens already bought by customers will still be honoured.

It was still unclear yesterday what will happen to Woolworths' pensioners, who could lose out because their pension fund is £100 million in deficit. Woolworths will recoup some cash from the sale of 2Entertain, the DVD and CD publishing business it jointly owns with the BBC and the only part of the group not in administration. Talks between Woolworths' board and the BBC over 2Entertain are continuing. But sources said that Woolworths' management will also speak to other bidders.

While Deloitte presses on with the sale of Woolworths' component parts, the chain had a very strong day's trading yesterday.

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