Habitat owner Hilco plans to write off 60% of the furniture retailer’s debts as part of a turnaround plan.

Hilco is set to convert into equity €60m (£52m) of Habitat’s €100m (£87m) debts that the fund acquired when it took over the retailer, according to The Financial Times.

Last month Hilco bought Habitat for €3 from the Kampard family, which owns Swedish furniture giant Ikea. As part of the deal it took on the business as well as its debts.

The Kampard family provided around €20m (£17m) to prop up the loss-making furniture chain, while Hilco injected €10m (£8.7m) of its own funds.

Like-for-like sales at the retailer were up 17% over Christmas, while online sales were more than double what was forecast.

A source said the chain’s revival plan will focus on product availability, margins and cost-cutting, as well as developing the retailer’s online business.

A series of management changes have been made in recent weeks, including the appointment of Paul-Henri Cecillon as head of retail for Habitat in Europe. Rob Lane was appointed head of retail in the UK.  Mark Saunders continues as chief executive of the Habitat Group.

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