John Duffield, one of the City's last mavericks, was preparing last night to cede control of the New Star asset manager, which he founded eight years ago, after being forced into crunch talks with his bank lenders over its £240 million of debt.

Potential bidders were already circling New Star Asset Management as Mr Duffield appeared to be close to sealing a debt-for-equity swap involving five high street lenders. This would remove the debt burden and, with it, a poison pill against a bid.

Aberdeen Asset Management, run by Martin Gilbert, a long-standing friend of Mr Duffield, is one of several pontential trade buyers understood to be interested in buying New Star. It is hoping to wrap up talks with its banks within the next few days.

Henderson, the London fund management group, may also be keen to bid for parts of the group, which has built its reputation on a “star manager” culture backed by a relentlessly high-profile marketing campaign aimed at retail investors.

Hellman & Friedman, the American private equity group that owns Gartmore, has held early talks with New Star and may renew its bid interest once the group becomes debt-free.

Mr Duffield, who famously prefers woolly jumpers to suits and detests computers, was at the heart of emergency talks with New Star's five banks yesterday. They are HBOS, Lloyds TSB, Royal Bank of Scotland, HSBC and National Australia Bank.

The banks intervened after the struggling fund manager, which has been hit by investor defections and a crumbling share price, suspended redemptions in its flagship £470 million International Property fund last week.

It is understood that the banks were concerned that New Star might be forced to shut the exit on other funds after institutions rushed to withdraw their capital from the otherwise high-performing commercial property fund.

New Star's plight is a bitter blow for Mr Duffield, who still owns 7 per cent of the company and has seen the value of his investment collapse by more than 90 per cent this year.

Mr Duffield founded New Star in 2002 after selling Jupiter, his previous venture, to Commerzbank, his former employer. Mr Duffield, a close friend of Richard Desmond, the media magnate, is thought to have banked £175million from the sale, although he courted controversy by describing the German bank as “Nazi” in a dispute at the time. His relationship with Commerzbank has been tense ever since.

Last year Mr Duffield raised eyebrows again when he unveiled plans to run up the debt bill in order to facilitate a £364 million return of capital to shareholders. At the same time, he and trusts representing family interests managed to avoid some of the effects of the subsequent credit crunch, collecting an estimated £155million through share sales that reduced their stake from 20 per cent to 12.5 per cent.

Mark Dampier, of Hargreaves Lansdown, the stockbroker, urged New Star to provide clarity about its financial position as soon as possible to help thousands of individual investors to decide whether to stay in its retail funds. New Star's funds are ring-fenced and should not be affected by the company's troubles, he said.

Terms of a proposed debt-for-equity deal were unclear last night. New Star's shares were down by 68 per cent at one stage yesterday, falling as low as 4p, as its prospects dimmed and investors predicted that their shareholdings would be heavily diluted once the banks took control of the equity. They closed down 43 per cent at 7.99p.

Funds under management slumped from about £19.8 billion at June 30 to £14.3 billion by mid-November and are thought to have continued to fall.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive