The decision will also spark a temporary ban on all gift vouchers at the store, which sells PlayStation, Xbox and PC video games.
Game – the struggling computer games retailer – was put into administration on Monday morning after failing to reach a rescue deal over the weekend. It will now close half the UK portfolio of shops – focusing its efforts on saving the remaining 333 UK stores for a possible deal over the next few weeks.
Those 333 stores will continue to employ 2,814 people, until a buyer is found.
Game employs 10,000 staff in 1,270 stores in nine European countries and Australia. Administrator PwC has also been put in charge of selling the company’s overseas operations.
“We just need a bit more time to push the deal over the line,” said administrator Mike Jervis of PwC. “There is a huge amount of complexity in the Game situation, because of the technology involved and the extent of the overseas portfolio.”
The chain, which employs 385 staff at its headquarters in Basingstoke, Hampshire, and around 5,100 in its UK stores, has suffered dire trading in recent months, while some suppliers refused to stock the retailer as its worsening finances came under increased scrutiny.
Last week, administrators won a 10-day window of protection from creditors, which allowed Game to miss its £21m quarterly rent payment to landlords. There is also a £12m wage bill, £10m in VAT and £40m owed to suppliers.
The company also hoped the limbo-period would give it time to negotiate a so called “pre-pack” with three potential suitors and the banks.
Banks turned down the offer by turnaround specialist OpCapita – which also owns Comet – because the deal stipulated OpCapita would get its money back before the banks.
GameStop and Hilco have also made approaches.
RBS is leading a “lender-led offer” that would see a debt-for-equity swap for the portfolio of shops. However, sources said that this remained a “Plan B option” with all lenders preferring to see a deal struck with a third party.
Game suffered a dismal Christmas and was later forced to ask suppliers for more generous trading terms. However, many stopped supplying it with new releases, such as Mass Effect 3 and Street Fighter X Tekken, leaving fans disappointed and adding to the group's trading woes.
Game agreed fresh lending facilities with banks last month and began seeking access to alternative sources of funding earlier this month.
The group has already signalled that losses for the year to the end of January are likely to be around £18m.
Julie Palmer, a partner at Begbies Traynor said the way communication had been handled at Game had meant administration was a forgone conclusion.
“Three weeks ago when the media began widely reporting … how their supplier’s lack of confidence left it without the season’s key titles, it was only a matter of time before the inevitable administration was formalised… To make matters worse, criticisms by employees point to little communication with staff.
“The resulting lack of morale could make survival even more difficult as the business has both internal and external confidence issues to address before a deal will be struck by anyone.”