The retailer's lenders have seized control of the company, however, under the pre-pack administration passed through by the department store, the business will continue to operate.
Its lenders are made up of High Street banks and USA hedge funds, including Barclays and Bank of Ireland, as well as Silver Point and GoldenTree.
Debenhams has confirmed that the business has appointed administrators to sell the group.
The group's lenders want to close up to 50 stores via an insolvency process known as a company voluntary arrangement.
The company said this morning that it was talking to its lenders about accessing more debt, however the plan swiftly went out the window.
Today, chairman Terry Durry called the situation "disappointing" but said: "We remain focused on protecting as many stores and jobs as possible, consistent with establishing a sustainable store portfolio in line with our previous guidance".
In April past year, the company announced an 84.6 per cent drop in its pre-tax profits, blaming the "Beast from the East" for disturbing much of the footfall.
Shops will continue trading for the time being but Debenhams had already proposed closing some 50 branches.
Debenhams, which has several stores in Ireland, said suppliers, employees, pension holders and customers would not be immediately affected by the transaction.
A statement from Debenhams says: The Board confirms that it received a revised, highly-conditional, proposal from SDI in the early hours of 9 April, which indicated a willingness of Sports Direct to underwrite an equity issue of £200 million.
Debenhams' new owners have put the chain up for sale, so Ashley could still play a role but he would likely need to take on large parts of the retailers' debt, Khalaf said.
Mr Ashley's attempts to take control of Debenhams had become increasingly desperate, and over the weekend the businessman demanded the board be investigated, two members to undergo lie detector tests and trading in its shares to be suspended.