Germany-based retailer Neckermann is applying for insolvency, after failing to satisfy its owner that cost-cutting plans would produce a viable business.
The struggling mail-order firm planned to cut 1,380 of its roughly 2,400 jobs in Germany to secure financing for the future.
In April, Neckermann had announced plans to shut down its catalog business and sell only through the internet, a move which is likely to result in almost 1,400 job losses.
Since then the retailer had been in talks with staff representatives and said last week that it did not have the funds to pay staff the compensation they were seeking for the redundancies.
Neckermann, owned by private investment firm Sun Capital Partners , sells products from clothes to technology, furniture and homewares.
Verdi trade union representative Wolfgang Thurner said that Verdi and Neckermann had been able to reach a compromise but that private equity owner Sun Capital had not approved the plan.
Sun Capital spokeswoman told the news agency that it had been willing to provide €25m in financing, but the plan presented by the management required €60m and therefore it has decided to quit on its investment.