Borders UK has gone into administration, putting 1,150 jobs at risk, MCR, the insolvency and restructuring firm, confirmed today.

The bookseller had been poised to enter administration since last night as last-minute rescue talks faltered. However, BDO Stoy Hayward, the administrator Borders had placed on standby, discovered a conflict of interest that prevented them from stepping in.

It is understood that the company acts for Borders Group, the American company from which Borders UK was spun-off in 2007. It retains some rights over concessions.

Borders, which has 45 stores including a handful that trade as Books Etc, has been struggling to secure sufficient cash to trade through Christmas.

MCR said the business continued to trade while a buyer is sought for all or some of the company’s stores.

Phil Duffy of MCR said: "All outstanding employee wages have been paid up to date and ongoing wages for retained staff will continue to be paid as an expense of the Administration."

“The appointment of MCR as administrators to the business is indicative of the weakening position of book retailers in the current market with competition on bestsellers from supermarkets and the growing strength of the digital and online markets in this sector,” he added.

Borders was bought in July by Valco Capital Partners, the private equity division of Hilco, the distressed retail specialists.

The company has been ravaged by internet competition and encroachment on its market by supermarkets. It was spun off from Borders Group, its American former parent company, in 2007, when it was bought for £20 million by Risk Capital, the private equity firm owned by Luke Johnson. The number of stores was dramatically reduced from 79, with Risk Capital appointing RSM Bentley Jennison, the restructuring specialists, to oversee sell-offs.

When the company was bought by Valco, Philip Downer, Borders’ chief executive, spoke of his optimism in securing its long-term future. However, the book market has been struggling. Waterstone’s, the biggest chain in the UK, which is owned by HMV, saw sales fall by 3.4 per cent in the 18 weeks to August 29.

Valco appointed Clearwater Corporate Finance to find a buyer for the business. WHSmith is reported to have pulled out of talks late last week. HMV, the owner of Waterstone’s, is also believed to have been involved in discussions, although it is not thought to be interested in more than a handful of the Borders stores.

Since negotiations over a sale collapsed, Borders has been embroiled in emergency talks to try to secure its future. At least two of Britain’s biggest publishers, Hachette UK and Random House, recently ceased trading with the chain. Shoppers have been unable to use Borders’ website to make purchases since Monday, with any attempt to place an order producing a message stating: “Borders.co.uk is currently not able to process your order”.

Borders opened in Britain for the first time in 1997. Its American parent was set up in 1971 by Tom and Louis Borders, two brothers who studied at the University of Michigan in Ann Arbor, where the company is still based.

Borders Group, like its former British subsidiary, is finding life difficult. The American book trade is alarmed at a price war between Amazon, the online retailer, and Wal-Mart, the world’s biggest supermarket. Borders Group reported a loss of $37.7 million (£22.5 million) for the three months to October 31.

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