An interim examiner has been appointed by the High Court to Elverys Sports, which employs 654 people in 56 stores nationwide.
The move on the petition of the National Asset Management Agency comes as a so-called pre-packed receivership of the Co Mayo company, which would have ended in a management buyout, unravelled in the last few days.
Mr Justice Brian McGovern was told that the board of the company which owns Elverys Sports - Staunton Sports - supported the petition by the NAMA company National Asset Loan Management Ltd for an interim examiner to be appointed.
The judge was told that it was not a hostile petition and NAMA is the company's largest secured creditor, with loan facilities due and owing of €23 million and £250,000.
Moving the petition, Rossa Fanning said NAMA was optimistic in relation to the company continuing as a going concern and believes it has a very good prospect of surviving.
In a statement the company said it would continue to trade as normal during the examinership process, with the examiner's intention being to "protect the business with a particular focus on job security."
"The management team is currently in the process of engaging with all suppliers, and is absolutely committed to finding a positive solution for the business," it said.
The court heard that there were now two rival bidders - the existing management and Mick Ashley’s Sports Direct - jockeying for position.
Counsel said there was no doubt Elverys is insolvent but it is believed the underlying business is viable as a going concern once the debt issues are dealt with.
NAMA, he said, have indicated it will give financial support once the company has court protection.
Counsel said NAMA wanted a successful resolution of the examinership process.
Mr Justice Brian McGovern, appointing Simon Coyle of Mazars as interim examiner for the next six days initially, deemed the circumstances exceptional and set down the hearing of the petition for 18 February next.