The largest shareholder in ailing chain Woolworths today outlined an alternative plan to help save the group from sale or administration.

Property entrepreneur Ardeshir Naghshineh, who owns more than 10% of Woolworths, is urging the group to remain as a going concern by selling off some of its store leases to raise cash.

He said he had held discussions with the chain’s lending banks over the plans and confirmed they were interested in taking negotiations further, this time with Woolworths’ management.

Woolworths is said to be thrashing out a possible rescue deal to avoid administration, which could reportedly see it sold for £1.

Hilco, the restructuring specialist, is said to have made an approach to buy the retailers’ 800-store business arm for the nominal sum, reportedly sweetening its offer at the weekend by saying it would also assume a greater share of Woolworths’ debt.

But a sale to Hilco would not be in the interests of shareholders or staff, according to Mr Naghshineh.

He said his alternative plan would ensure cash flow in the run-up to the key Christmas period and put the company on a “sound platform for the immediate and long-term future”.

He added: “Woolworths has a very strong balance sheet and its retail division enjoys a unique place on the high street with one of the best loved and recognised brands.

“The banks have now said to me that they have open minds and want to pursue this in further talks, this time involving the company. This was the first time that an alternative business plan has been put to them and I am pleased that they are prepared to listen.”

The Sunday Times reported yesterday that Hilco tabled a last-ditch offer at the weekend to take on up to £300 million of the group’s debts, leaving lenders with just £85 million.

Last week the syndicate of lenders, led by Bank of Ireland subsidiary Burdale Financial and GMAC Commercial, held out on the deal in which Hilco was reported to have offered to buy the shops for £1 and assume about £265 million of Woolworths’ debts.

The newspaper said unless a deal was reached in the next few days, the group could fall into administration - putting 30,000 jobs at risk.

It said that even if the deal goes ahead, Hilco might initiate a “pre-pack administration” of the stores business, which would enable it to cut the operation down to a smaller sustainable chain.

Woolworths confirmed on Wednesday it was in talks over a possible offer.

A spokeswoman for the retailer refused to comment on the talks but it is believed they will go on until at least today and a positive outcome is by no means certain.

A retail deal would leave Woolworths with EUK, its entertainment wholesale division, and 2Entertain, the music and video publishing venture with the BBC.

Woolworths, one of the UK’s best known chains, has been a presence on UK high streets for nearly 100 years but has been battered by competition from supermarkets and internet retailers.

It reported half-year losses of almost £100 million in September, as it warned its retail arm faced “operational issues and strategic challenges”.

Former Focus DIY boss Steve Johnson, who joined the company as chief executive this summer, is undertaking a strategic review.

The company reported a net debt position of £295 million in August.

Hilco is well known in UK retail circles after acquiring fashion chain MK One this year and subsequently placing it into administration.

It also bought up the debt of Allders in 2005 before the department store chain went into administration. Hilco said its actions, including the provision of £15 million of additional working capital, meant 30 Allders stores were sold and 3,500 jobs saved in the process.