The proposed deal to rescue Woolworths is close to collapse, according to press reports.

A number of creditors to the embattled high street giant were last night refusing to sanction a deal to sell Woolworths’ retail arm for the nominal sum of £1.

Earlier this week it emerged that turnaround specialist Hilco had made a bid to take on the retail business – as well as debts of around £250m – but leaving the profitable DVD business 2entertain and distribution arm EUK.

However, a number of the chain’s lenders – which include Barclays and US bank Wachovia, itself a victim of the credit crunch – have opposed the plan, which was last night “teetering on the brink of collapse” according to the Daily Telegraph.

If a rescue package for the retail business cannot be agreed, thousands of jobs are likely to go in another blow to the British high street.