computer games giant GAME went into administration yesterday.

Thousands of high street workers face losing their jobs after the computer games giant GAME went into administration yesterday.

The group, which has 609 stores and 6,000 staff in the UK, has run out of cash and was unable to meet rent and wage payments due this week.

The failure represents the biggest British retail collapse since Woolworths and its 815 stores went under at the end of 2008.

'Horrible situation': Around 6,000 staff face job losses at computer games giant GAME after the company sunk into administration today

Staff took to technology websites and forums to express their anger and disappointment at what one called a ’horrible situation’.

The difficulties at Game are testament to the current squeeze on living costs coupled with a change in shopping habits and games technology.

 

Administrators said the stores would remain open as it attempts to find a buyer for the business as a going concern.

A number of bidders are circling the carcass and will now be able to purchase it without taking on the company’s debts and other liabilities.

Massive debts: Customers queue outside the GAME store in London's Oxford Street at midnight for the PlayStation Vita last month. But big products like this haven't been enough to stave off the firm's cash-flow crisis

However, it seems certain that hundreds of stores will go and thousands of employees will be out of work within weeks.

While the bulk of the Game business is in the UK, with 609 stores and 6,000 staff, there are around 700 other outlets and 7,000 staff in sister chains overseas.

The fate of the company is now in the hands of administrators at PwC. 

Mike Jervis, joint administrator and partner at PwC, suggested the firm had simply run out of cash.

The retailer had a £21m rent bill due last Sunday and faces a £12m wage bill this weekend. PwC is expected to honour any wages owed.

'Going concern': The company owes £40million to suppliers and £10million in VAT

Another £40million owed to suppliers and £10m in VAT seems unlikely be paid.

Mr Jervis said: ‘The group has faced serious cash-flow and profit issues over the recent past. 

'It also has suffered from high fixed costs, an ambitious international roll-out and fluctuating working capital requirements.’

Poor sales at Christmas led the Basingstoke-based firm to signal that losses for the year to the end of January were likely to be around £18million.

However, Mr Jervis insisted there is still demand for a mainstream high street computer games retailer.

‘We believe that there is room for a specialist game retailer in the territories in which it operates, including its biggest one, the UK,’ he said.

‘As a result we are hopeful that a going concern sale of the business is achievable.’

It is understood that the latest financial crisis was triggered when one of Game's main lenders, the taxpayer-backed Royal Bank of Scotland, objected to the terms of a rescue deal with private equity firm OpCapita, which recently bought electrical goods retailer Comet.

RBS is understood to be spearheading a group of banks which could try and buy the business out of administration. OpCapita and American retailer Gamestop are also interested.

Game has suffered dire trading in recent months, which forced it to ask suppliers for more generous trading terms.

However, several responded by deciding to protect themselves by refusing to supply the retailer with any new releases, such as Mass Effect 3 and Street Fighter X Tekken.

The group has also been battered by competition from cheaper rivals on the internet, such as Amazon and Play.com, and the major supermarkets.

Separately, many people now download game Apps direct to tablets or smart phones, rather than buying software to be loaded in to consoles like the PlayStation, xBox on Nintendo Wii.

Game, which operates in nine European countries and Australia, issued a statement about the decision to enter administration, suggesting it was the last resort.

‘This decision is taken after careful consideration and ceaseless interrogation of every possible alternative,’ it said.

The firm’s chief executive, Ian Shepherd, issued an email to worried staff on Friday saying: ‘I have fought, and all of the management team here have fought with every ounce of energy to avoid arriving at this point. That we haven’t succeeded makes me angry and sad in equal measure.’

However, many employees accused Mr Shepherd and other executives of leaving them to find out what was happening through the media.

One posted on the MCV computer games website: ‘Ian's email tells us nothing we had not already heard elsewhere and typifies the BS style of rhetoric that suits like this man enjoy using.’

Another talked of the management’s handling of the situation as ‘pathetic’, while a third said staff were in a ‘horrible situation’.

One employee hit out, saying: ‘A great company run into the ground by the ignorance and greed of the people at the top.’