United Carpets has effectively put its shops into administration and then bought them straight back again in order to save on crippling rent liabilities.
However, if the plan fails to work, hundreds of jobs will be put at risk.

United Carpets Group's trading subsidiary United Carpets (Northern) operates the large United Carpets chain of shops in the UK but was placed into a pre-pack administration last week after a poor performance and mounting debt.

However, according to administrators Begbies Traynor: "The United Carpets Group was approached to make an offer for the business and assets out of administration and was successful in securing 73 stores as well as the head office site and its two warehouse premises."

The move means that United will now have a chance to renegotiate the terms of its leases with landlords - but if they do not agree to cut rents shop closures could follow.

Begbies Traynor was initially instructed to review the existing business due to increasing concerns regarding the performance of certain franchised and corporate stores. The review highlighted the fact an increasing number of outlets were loss-making and unable to meet outstanding payments.

Speaking of the deal, Lila Thomas partner at Begbies Traynor, said: "The administration was a consequence of the challenging economic climate, but also the long-term lease commitments to the landlords of the stores.

"Attempts were made by the company to renegotiate lease terms. However, these proved unsuccessful. The administration of the company became inevitable. The subsequent sale was a positive result and has safeguarded the jobs of those working for the company."

However, a statement put out by United Carpets warned that it might have to close stores. It said: "The appointment of the joint administrators followed a review of the business which concluded that without substantial rent reductions a [significant] number of the corporate and franchised stores would be unable to continue to trade."

It said it would now try to agree "appropriate" rents with landlords, but that if it could not, stores would be closed. It added that, after restructuring, it was confident it would have a sustainable business.