Shares in Game dropped to around 1p in early trading today
Up to 500 Scottish jobs are under threat after retailer Game Group announced it is looking for new funding sources to pay its suppliers and landlords.
Game, which has 52 Scottish stores from 600 in total across the UK and Ireland employing around 6,000 people, said today it was also considering a sale of all or part of the business.
It has asked suppliers for credit leeway in an effort to secure new products, but admitted today its future remains in the balance.
Game admitted today it was “uncertain” its efforts to negotiate with suppliers had been successful.
The retailer has been unable to stock latest console game releases as a result of its problems with trade creditors, and suppliers like Nintendo and EA Games held back new releases to Game last month.
A statement released by Game said: “It is uncertain whether any of the solutions currently being explored by the board will be successful or will result in any value being attributed to the shares of the company.”
Game's failure to stock sci-fi game Mass Effect 3 in a dispute with Electronic Arts at the turn of the year quickly led to other suppliers refusing to extend credit to Game.
Game has suffered poorer sales as consumer spending has scaled back, but has also been hit by game developers pushing more of their products through secure online download platforms in an effort to counter piracy.
The boom in online game retailers, the largest being Amazon, has also contributed to Game's current trading difficulties.
The company's share price has fallen from 70 pence a share at the start of the year to just 1.1 pence today, with its value dropping by more than half in today's trading alone, leaving the group worth just £3.8 million.
A quarterly rent bill, due for payment in two weeks, could be enough to push the company into administration.
The group reported in a first half trading update in July its net debt had risen to £91 million against £63.5 million a year earlier.
Game has already signalled losses for the 2011 year to January are likely to be around £18 million following a dismal Christmas for the group when sales were down nearly 13 per cent on the previous year.
The group said a lack of new game consoles coming on to the market and a drop in consumer spending had contributed to the drop in sales.
Game agreed a new bank facility with a consortium of banks last month, though the new loan was not enough to reassure suppliers.
The company is reported to have hired advisory firm Rothschild to help it sell all or parts of the business.
The company has also lined up accountancy firm Deloitte to handle any insolvency process. Game has 1,274 stores worldwide trading under the Game and Gamestation brands, employing more than 10,000 people.