Little Chef has agreed the sale of 196 of its 234 restaurants for between £5m and £10m to venture capital group RCapital after going into administration this afternoon.
A statement by administrator PricewaterhouseCoopers (PWC) said the iconic roadside group had incurred "significant losses" since it was bought by entrepreneurs Simon Heath and Lawrence Wosskow for £52m last October.
Rumours have circulated since late December that it was struggling to meet rent payments after agreeing a £60.3m sale-and-leaseback deal on 65 sites with Israeli property group Arazim to fund a revamp. Some reports suggested it was losing up to £3m per year in sales.
Little Chef co-owner Simon Heath, who will remain with the existing management team, said: "The business has been through incredibly tough times in recent years but one thing we do know from our existing customers is that Little Chef is a much loved brand.
"This is a British icon which has, despite its chequered past, maintained a level of brand integrity. Albeit out of date, it clearly has a future in today's marketplace."
An RCapital spokesman said: "While Little Chef has been through incredibly tough financial times of late, the potential to re-energise the brand and turn the business around is enormous.
"We are restructuring the business and building on the successes by adding to the mix our financial backing and a team of market experts to ensure we get the business back on track and give the customers what they want."
PWC is currently looking for a buyer for the remaining 38 sites but said nobody was currently in the frame.
A PWC spokeswoman said it was still unclear how many of the group's 4,000 jobs would be saved.
By Tom Bill
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