It puts the future of 1,100 shops and 16,000 employees at risk.
Scores of staff are employed at McColl’s 11 outlets in Wigan borough.
However, it has been claimed that the billionaire Issa Brothers are poised to take it over.
A rescue deal would have also taken on the business as a going concern, absorb its debts of over £100m and take over the company’s pension scheme.
But administrators have now been called in after lenders rejected the proposal.
McColl’s has struggled in recent years after witnessing soaring costs due to supply chain disruption, inflation and its large debt.
The company confirmed “the lenders made clear that they were not satisfied that such discussions would reach an outcome acceptable to them”.
It said the company will now appoint administrators from PwC in an effort to “preserve the future of the business and to protect the interests of employees”.
On Thursday evening, McColl’s had said it was in talks over “potential financing solutions” to resolve its funding issues.
Shares in McColl’s were suspended earlier this week after the company delayed the publication of its latest financial results due to its financing talks.