The Wedgwood family is preparing a last-ditch scheme to stop the sale of the family business, founded in 1759, to an American fund.

Deloitte, the administrators of Waterford Wedgwood, have agreed in principle to sell the china business, which was merged with Waterford Crystal in 1987, to KPS Capital, a specialist distressed investor.

But The Times has learnt that members of the Wedgwood family plan to secure funding in Asia to start a rival ceramics company operating under the family name and manufacturing Wedgwood classics - the designs of which are out of patent - should KPS win Waterford Wedgwood.

Members of the family told The Times last night that they believed the business would “die a slow death” under KPS. Some of the family fear that KPS will close Waterford Wedgwood's UK factories, which employ nearly 1,900 people.

The family is supporting a rival offer from an Asian trading conglomerate, whose bid would demerge Wedgwood from Waterford and re-establish the ceramic maker as an independent brand. Tom Wedgwood, formerly a consultant to the company, but with no current ties to the group, said: “There is a lot of passion in the family as it watches this situation unfold. Everyone's sole interest is that the business is still a strong going concern in 50 years' time.”

KPS declined to comment on whether it would keep any British jobs.

Sir Anthony O'Reilly, the Irish media tycoon, and Peter Goulandris, his brother-in-law, will be left about €400 million (£358 million) out of pocket by the collapse of Waterford Wedgwood, of which Sir Anthony is the chairman.

KPS has been in talks with Waterford Wedgwood's board to buy the business for several months, but the company missed a January 2 deadline to repay some of its €449 million debt and it was placed into administration.

Waterford Wedgwood's main lending bank, Bank of America, offered last weekend to give Sir Anthony and Waterford's board another 16 days to complete the deal with KPS. However, other members of the banking syndicate, including hedge funds which had bought into the company's debt, voted down the reprieve.

Deloitte, which declined to comment last night, has been in talks with a number of other parties, but the Wedgwood family now believes that the bid by KPS will go through.

Sources said it is not known how much KPS will pay for the company.

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