There are fears that struggling high street store Debenhams could fall into administration this week. 

How has this happened?

There has been a number of warning signs for shareholders, with the high street chain issuing a number of profit warnings in the last year. 

Struggling with competition online, like-for-like sales also slumped for the beleaguered department store chain. 

The store has debts of £560 million and is expected to lose £25m this year. 

Is there a rescue deal in sight?

Yes, and no.

Sports Direct owner and business tycoon, Mike Ashley, already a shareholder in Debenhams, had proposed a last-gasp deal involving a £150m equity-raising that he would underwrite and a package of measures to reduce its remaining debt.

READ MORE:  Mike Ashley offers to underwrite Debenhams' £150m rights issue

However, it is thought that Debenhams has told Mr Ashley to abandon his attempts and instead would hand its debt to its lenders in a pre-pack administration deal. 

What are the conditions of the board to Mike Ashely's rescue deal? 

The conditions laid out by Debenhams board are that Mr Ashley:

-Withdraws his request for an extraordinary general meeting aimed at ousting every board member apart from its finance director
- Enters into a stabilisation agreement which would require him to refrain from public statements that could damage the company
- Agrees on a press release with Debenhams and its lenders that would be issued jointly on Monday
- Provides a legal guarantee that the £150m he is pledging would be provided if Debenhams agrees to his request to become its chief executive.

How much are shares worth?

If the company went into administration shares would be worthless, however, they are currently trading at around 2p a share. 

Four years ago the shares were worth 95p. 

What is a pre-packed administration?

Under rumoured plans, the chain would enter a debt-for-equity swap to reduce Debenhams' £560m‎ of borrowings, as well as a Company Voluntary Arrangement - led by KPMG - to slash rents and close loss-making stores.

READ MORE:  Mike Ashley 'tells Debenhams director to take lie detector test'

Silver Point would take ownership of the business. In such a deal, the 29% stake in Debenhams held by Ashley’s Sports Direct will become worthless.

Would stores close? 

Once under creditor ownership, the company would enter into a company voluntary agreement that could see 50 of its 165 stores close from 2020.

A number of stores in Scotland have already been earmarked for closure. 

Do we know how many jobs would be lost?

We don't know exactly how many jobs would be lost but experts have said it could be thousands. 

What about gift cards?

The company are still selling gift cards online, however, advice from money experts has been to spend them as soon as possible. Retailers such as WH Smith stopped selling Debenhams gift vouchers in 2018.

It is unclear if gift cards would be honoured if the company was to enter administration. 

Does it spell the end for Debenhams?

If a pre-packed deal or a salvation deal with Mike Ashely could be arranged then it is unlikely that Debenhams will vanish entirely.