Management, headed by chief executive Gary Favell, is set to buy the business by tomorrow after its owner Merchant Equity Partners (MEP) agreed to hand over extra cash for the management buy-out.
Last week it had been feared MFI would go under and the retailer had even lined up Kroll as its administrator if talks this weekend were not successful.
The retailer was also in discussions to agree new terms with its landlords ahead of this week’s rent day and had appointed restructuring specialist Argyll to help it seek emergency funding to stay afloat.
Reports suggest that about half of MFI’s stores could close under the new management – although they have yet to confirm this.
Favell said: “I am delighted that we have secured the future of the MFI business through this MBO and have the capital to provide continuity and security for our customers. MFI is a fantastic business and with the large amounts of capital injected over the last two years, we have worked hard to improve service levels and the retail experience for our customers.
“Our new Küchen Lab brand is growing fast, taking market share from our competitors, and our distribution centre at Thorne is best-in-class. We have many plans to further improve the business – including discussions with a number of major UK retailers to increase the number and quality of concession partnerships within our stores."
MEP bought MFI for£1 in 2006 and in recent months has continued to be hit by the downturn in consumer spending.
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