Mosaic Fashion, the Oasis to Karen Millen clothing company, is set to be broken up in the next few days in a pre-pack administration that will see some chains sold and some stores shut.

The troubled Icelandic bank Kaupthing is owed about £450m by Mosaic - whose brands include Principles and Karen Millen – and will take control of the majority of the group and use the pre-pack process to shed unprofitable stores.

Principles, the womenswear chain, and Shoe Studio, a set of footwear brands, are to be sold off as part of the break-up of the group.

Department store chain Debenhams is thought to have held separate talks with Kaupthing with a view to buying Principles. Former Rubicon director Peter Davies, who ran Principles and Warehouse between from 2001 to 2005, has confirmed he is in talks to buy the business.

Sir Tom Hunter’s West Coast Capital and Dune, the shoe chain, are also thought to have held talks to buy Shoe Studio.

One person involved with the process told the Financial Times that indicative bids put a valuation for Shoe Studio and Principles combined at less than £20m.

Equity in Mosaic, which is owned 49% by Baugur, the collapsed Icelandic investment group, is buried under the debt mountain and could be effectively worthless, giving Kaupthing the ability to take control.

Derek Lovelock, chief executive of Mosaic, and other senior managers are thought to be taking stakes in the new Mosaic company that will buy stores and parts of the business through the pre-pack deal.

Mosaic owns around 1,800 stores and concessions including Warehouse, Oasis, Principles and Coast and the pre-pack deal will leave many landlords with empty shops.

The move is a further blow to landlords already struggling with empty shops left by other retailers that have gone into administration in the past six months.