Johnston Press, the publisher of the i newspaper and The Scotsman, has said it intends to place itself into administration.
Last month, Johnston Press, which also owns hundreds of local titles, put itself up for sale in a bid to refinance £220m of debt repayable next year.
But in a statement on Friday night, the company's board said that, despite "considerable interest", none of the offers had delivered "sufficient value".
They added: "As a result, the board has concluded that there is no value in the ordinary shares of the company.
"The board has resolved that the best remaining option is for the company and its principal subsidiaries to be placed into administration."
In an email to staff, Johnston chief executive David King said that, subject to court approval, the company's business and assets would then be sold to a newly-incorporated group of companies controlled by investors who own Johnston's debt.
He said that the new business would have "much lower debts" and the new owners "intend to provide new money to carry us forward".
It was hoped the transfer would be completed within 24 hours, he said.
Meanwhile, he said, the company's operations would "continue uninterrupted" and employees should "turn up for work as normal".
The newspapers and websites would continue to be published and suppliers would be contacted in order to re-establish trading relationships, he added.
The company reportedly has a £40m pension deficit and Mr King said the pension scheme would not be transferred and the Pension Protection Fund would be notified.
Shadow culture secretary and deputy Labour leader, Tom Watson, said the news marked a "grim day for local newspapers and another deeply worrying one for local democracy".
Alex Sobel, MP for Leeds North West, also raised concerns about the situation faced by Johnston, which owns The Yorkshire Post and the Yorkshire Evening Post, saying: "Local papers raising local and regional issues are vital for our democracy."
The i had been a rare success story in Britain's flagging national newspaper market, which has been wrestling with an accelerating shift of readers on to digital platforms.
The title launched in 2012 as a sister newspaper to The Independent's print edition, and was bought by Johnston Press for £24m four years later.
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Nevertheless, its circulation in August of just over 244,000 copies was 10% lower than the previous year.
With 2,000 employees and more than 200 titles, Johnston Press remains one of the biggest employers of journalists in the UK but the growth of digital platforms such as Facebook and Google, and the rise of 'citizen journalism', have cost it dearly.