McColl’s has collapsed but a company operated by the co-owners of Asda is expected to agree a deal with administrators that would rescue the bulk of the stricken convenience retailer.

Sky’s City editor Mark Kleinman, who reported earlier on Friday that Morrisons had tabled a proposal, said the Issa brothers’ EG Group – the petrol station operator – was now front-runner to conclude a deal, though it was not clear if all 16,000 jobs would be saved.

An announcement could be expected, he said, as early as Friday afternoon.

McColl’s said it took the decision to appoint PwC as administrator after its lenders objected to the potential outcome of a sale for them and refused to extend a deadline for the retailer to find more cash.

The company has 1,400 stores but it is hoped that a sale out of administration would preserve the vast majority of its estate.

Kleinman reported that thousands of jobs could still be lost in any so-called pre-pack deal.

The billionaire Issa brothers – Mohsin and Zuber – are best known for their high profile £6.8bn takeover of Asda with TDR Capital, which completed in February last year.

EG Group has the same shareholder structure as Asda though the two are entirely separate entities.

McColl’s shares have been suspended from trading on the London Stock Exchange.

McColl’s said in a statement: “In order to protect creditors, preserve the future of the business and to protect the interests of employees, the board was regrettably… left with no choice other than to place the company in administration, appointing PriceWaterhouseCoopers as administrators, in the expectation that they intend to implement a sale of the business to a third-party purchaser as soon as possible.”

A spokesperson for the Trustee of the McColl’s pension schemes responded: “The pension schemes are significant stakeholders in the company, and the trustees call on all potential bidders to make clear that they will respect the pension promises made to the 2,000 members by McColl’s and its subsidiaries, and will not seek to break the link between the schemes and the company.”

They added: “The trustees are continuing to liaise closely with The Pensions Regulator, to establish how best to protect scheme members.

“They will continue to work with stakeholders to protect members’ interests and will keep members updated.”