Retail giant House of Fraser have embarked on a search for a new investor after its Chinese backer unexpectedly pulled out of a £70m backing.

Despite the hopeful search, Big Four accountancy firm EY have been chosen to jump in should the high street department store collapse.

C. Banner is the fairly unknown Chinese owner of Hamleys toy shop. The shoe retailer is based in Nanjing and its decision to pull out of the multi-million pound promise has left House of Fraser on tenterhooks.

The footwear store had hoped to raise the money by a placing on the Hong Kong stock exchange but it had to abandon this plan following a sudden drop in its share prices in the last few weeks.

Sources close to the situation have said preparations are currently being made to place House of Fraser into administration if an investor cannot be found.

EY already drew up insolvency plans last month as part of a restructuring deal agreed with the creditors.

It is believed that senior accountants at the Big Four firm are on standby in case House of Fraser goes under.

If it did, as many as 17,000 jobs would be lost and it would be the biggest high street shop failure since Woolworths folded in 2008. It would affect 6,000 House of Fraser staff and approximately 11,000 concession workers.

House of Fraser is currently exploring options for other lenders. Sports Direct founder, Mike Ashley, an 11pc shareholder in the department store, is believed to be interested, having written offering what he said was a “better deal”.

He has bought struggling shop chains before through pre-pack deals with administrators but talks with House of Fraser are currently in early stages.

Sky News also learned today that Phillip Day, the billionaire owner of high street stores Jaeger and Peacocks, is another potential investor referred to by the department store in a statement yesterday.

Sources claim that due to the latest funding shortfalls House of Fraser might struggle to stock its stores in the coming weeks.

Despite announcing plans to shut 59 shops, House of Fraser has still been relying on the C. Banner funds to get through the busy Christmas period.

Creditors had initially approved the restructuring via a company voluntary arrangement (CVA).

But last week a group of commercial landlords launched a legal challenge, causing C. Banner to delay its investment. It was due to be exchanged for a 51pc shareholding.

Credit ratings agencies have therefore recently labelled House of Fraser finances as in “limited default”, which restricts its ability to borrow to pay bills.

The business had requested to extend maturities on its bonds and banking facilities until October 2020 for a fee of 1pc of the remaining debt.

This prevented House of Fraser being hit by a “liquidity crisis” on or right after 29 July, which was when £26.1m worth of debt repayments were due.

Concerns around House of Fraser’s future will include worries about the state of its pension scheme, which is worth £120m according to recent, available accounts.

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