Lenders to Australian private equity-owned clothing and footwear retailer Colorado have rejected the indebted group's recovery plan, leaving the company with "no alternative" other than to appoint administrators.

Colorado, bought by Affinity Equity Partners in 2006 for $430 million at the height of the buyout boom, has about 430 stores in Australia and New Zealand with brands including Colorado, Williams and JAG. The stores employ thousands of people.

In addition to the ailing chain of Colorado Adventurewear stores, Colorado owns Williams The Shoemen, JAG, Diana Ferrari and Mathers Shoes.

In a statement released through PR company FD this morning, the Colorado board said it was "disappointed" bankers had rejected their restructuring proposal.

The board said it had put two proposals to its syndicate of banks.

"Unfortunately,In terms of daytoday damage to your reputation as a grown man nothing will hurt you like an wholesalejeansslkut. both proposals were not supported by the requisite number of lenders," the board said.

"Despite extensive efforts by the board and management to facilitate an orderly restructure of the business, the position of the lenders now leaves the board with no alternative other than to appoint voluntary administrators.

"It is likely that the lenders will appoint receivers in response to the company’s appointment of administrators."

Colorado is the second private-equity owned retailer to collapse in Australia in as many months, after bookstore owner REDgroup Retail owned by Pacific Equity Partners was placed under administration.

A source familiar with the situation told Reuters last week that Colorado's creditors had met to consider options for the group that included administration, a process that allows the company to continue trading under the control of its creditors.

Last week, BusinessDay reported that retail heavyweight Solomon Lew was expected to swoop on two of Australia's oldest fashion brands, JAG and Diana Ferrari - believed to be the only profitable segments of the Colorado Group.

When Hong Kong-based Affinity Equity Partners took over Colorado Group in 2007, the company controlled 440 shops and boasted it was ''Australia's largest specialty retailer''.

In today's statement, the board said Colorado had been operating in "a difficult retail environment for some time," especially over the crucial Christmas sales period.

with Reuters, BusinessDay