The firm, which has 45 branded Borders and Books Etc stores across the UK, has come under severe pressure from internet competition during the past year and supermarket discounting.

Administrator MCR said the business would continue to trade while a buyer was sought for all or some of the company's stores.

Borders has struggled with "severe" cash flow pressure this year as sales falls accelerated, administrators said.

Stock levels were also hit as several of the company's suppliers stopped or reduced its credit limits, while a number of credit insurers have also reduced their cover for the firm.

Joint administrator Phil Duffy said: "All stores currently remain open for business as normal whilst the administrators undertake a review of the company's affairs and seek a purchaser for all or some of the company's stores in which there has already been interest.

"All outstanding employee wages have been paid up to date and ongoing wages for retained staff will continue to be paid as an expense of the administration."

He added that booksellers in general had been hit in the current weak retail market, with competition from supermarkets and the internet.

Borders first opened in the UK in 1997 and was originally owned by the US book giant of the same name.

But the UK and Ireland arm was sold to buyout group Risk Capital Partners – headed by Channel 4 chairman Luke Johnson – in 2007.

Management, led by chief executive Philip Downer and finance director Mark Little, then bought the group back with financing from Valco Capital earlier this year.

It is thought that Borders had hoped to sell the bulk of its store portfolio to WH Smith, but its high street rival is understood to have walked away from a deal last Friday.

According to reports yesterday, HMV-owned Waterstone's is interested in a number of shops, while the Publishers Association is also thought to have established a committee to try and find a way for publishers to continue trading with the firm.

Borders's last set of available financial figures reportedly show that pre-tax losses jumped from £10.3m to £13.6m.

n Defence giant BAE Systems is planning to axe up to 640 jobs following a review of its workload. The firm said it will start consulting on 642 potential job losses across eight sites in its Integrated System Technologies Business.

The sites affected by the planned cuts are in Portsmouth, Chelmsford, Christchurch (Dorset), Cowes on the Isle of Wight, Filton near Bristol, Frimley in Surrey, Hillend in Fife and New Malden in south west London. The business affected by the cuts employs 3,700 workers at 11 sites on radar surveillance, command and information systems and underwater systems to UK and overseas defence and security customers.