ScS Upholstery, the sofa retailer, has become the latest British victim of the credit crunch as it was put into administration today and its trading arm sold in a private equity deal.

Shareholders are likely to be left with nothing, the Sunderland-based company said, but the sale of ScS's trading arm to an affiliate of US-based buyout firm Sun Capital Partners, called Parlour Product Holding, is expected to save 1,300 jobs.

The rescue deal will also mean the company's 96 stores will remain open. Administrators confirmed it would be "business as usual" for customers, suppliers and employees.

ScS shares were suspended from trading at 6.5p on June 23, after the firm said it was in talks to sell its sole trading subsidiary. The share price had already fallen more than 90 per cent this year and was trading at a fraction of its April 2006 high of £5.70.

The company warned at the time that such a sale would result in “negligible value” for the shares of its parent firm ScS Upholstery.

Mike Browne, chairman of ScS, said: “The sale to Parlour is expected to provide this necessary investment and to protect employees, trade creditors and customers, as well as helping to secure the future of a number of its suppliers with workforces in the UK and continental Europe."

ScS warned in May it would see an annual loss after it revealed wose-than-expected trading over the crucial bank holiday weekend.

Two weeks previous, the company said an insurer refused to cover five suppliers against the firm being unable to pay them, leaving the group with a sudden large cash requirement.

Sun has a background of rescuing struggling British firms, having bought van maker LDV - formerly part of the collapsed British Leyland group - in 2005.

ScS is the latest in a series of small British retailers to go into administration as indebted consumers cut back on spending amid higher food, fuel and borrowing costs.

Rival sofa firm Land of Leather announced an underwritten share sale to raise £15 million pounds last month, saying that without it the firm would not be able to continue trading in its current form.

Other recent casualties include shoe seller Dolcis, clothing chain Ethel Austin and beds retailer Sleep Depot.

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