Struggling hardware chain Homebase has been sold to its management team backed by retail turnaround specialist Hilco Capital for £1.
Homebase was put up for sale by its Australian owner earlier this year, just two years after completing a £340m takeover.
Sky News learnt yesterday that Hilco Capital had edged ahead of rivals after convincing management about its plan for Homebase, which is losing about £20m a month .
Australia's Wesfarmers said it expects to record a loss on the disposal of £200m to £230m.
Its been a disastrous foray into the UK market for Westfamers, which was hoping to use the purchase of Homebase to take on Britain's biggest DIY chain B&Q.
Wesfarmers has been forced to write off $500m after ditching some of Homebase's popular products. It's initial acquisition coincided with a downturn in the UK retail sector, which has seen many high street names close stores.
A sale to Hilco will be painful for an unknown number of Homebase's creditors and 11,500 workers, with store closures, an insolvency process called a company voluntary arrangement and disposals all among the likely options to be pursued.
Thousands of Homebase jobs are ultimately expected to go, whatever the outcome of the negotiations.
Hilco bought HMV, the music and entertainment products retailer, from administrators in 2013, and has revived the business, albeit with a reduced high street presence.
Its plans for Homebase are unclear, although the scale of its financial travails means a new owner will have to act swiftly to staunch the bleeding from one of the most disastrous takeovers in British retail history.
Sources said it was inconceivable that Hilco would not seek to restructure Homebase - which is part of Wesfarmers' Bunnings division - by closing a significant number of its 220 stores, potentially putting thousands of people out of work.
Wesfarmers chief executive Damian McGloughlin said: "We are very pleased to have reached an agreement with Hilco and this marks an exciting new chapter for Homebase."
He added: "With Hilco's support we have the commitment of an experienced partner, substantial additional capital, stability for the business and the opportunity to reinvigorate a brand that has been a mainstay of UK retail for over 40 years."