MFI saved by management buy-out

It emerged over the weekend that furniture giant, MFI, was on the verge of administration after struggling to find ways of raising funds to pay its quarterly rent for its 190 stores.

However, it is understood this morning that the retailer will continue to operate after a management buy-out is to secure the future of the business.

MFI’s chief, Gary Favell, said the buy-out will be completed within 24 hours due to cash handed over by the investment company Merchant Equity Partners (MEP), who bought MFI for £1 in 2006.

MEP is run by Henry Jackson, former investment banker, other MEP partners include John von Spreckelsen, former chairman of Somerfield, and David Hamid, former chief executive of Halfords, who is also chairman of MFI.

The buy-out is expected to safeguard employees and customer orders.

Should MFI have been placed into administration, it would have been the most high-profile victim so far in the retailing industry.

Over the last 30 years, MFI has grown to become the UK’s largest furniture retailer with a value of £1 billion.

However, competition from companies such as B&Q, Homebase and Ikea has meant that sales have plummeted.

The consumer downturn has had a devastating affect on the furniture industry. Sofa chain, ScS Upholstery, was placed into administration before Sun European Partners bought the trading operation for a small amount.

More recently, Rosebys, the furnishings and curtain chain, has been placed into administration, putting 2,000 jobs at risk.

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