The District Court of Reykjavik has refused a petition by the Baugur Group for extension of the moratorium of the company and therefore forced it into administration.
The company, which owned stakes in Wyevale Garden Centre and high street businesses has also filed for bankruptcy.

Following a meeting of the board, Kristin Johannesdottir chairman of group said: "The ruling is a disappointment to everyone at Baugur.

"We believe the company fulfils all the conditions for the extension and that the restructuring plan was viable. However, following the ruling, we have no choice but to file for bankruptcy."

The management and employees of Baugur have been working hard to save the company's assets in cooperation with its creditors since the collapse of the Icelandic banking system in October 2008.

Mr Johannesdottir added: "The board of directors would like to express gratitude to the employees and everyone else the company has had the pleasure of working with in recent years."