MFI, the UK’s biggest furniture retailer, collapsed into administration tonight for the second time in two months — putting more than 1,000 jobs at risk.

The administrators, MCR, will now attempt to sell the business as a going concern but, in the meantime, ‘closing down’ sales will be launched in all 111 of MFI’s remaining stores. It is thought unlikely that any buyer will come forward.

And some 26 stores will close immediately at the request of Galiform — the joinery company which previously owned MFI’s stores — with the immediate loss of around 260 jobs.

The move follows a tense stand-off between MFI’s owners and the landlords of its stores, including Galiform. MFI had requested a three-month rent-free period from the landlords of its stores — who, at the beginning of October, gave the firm just one month’s grace.

MFI said: “The administration follows the continuing pressure on the home market, which has accelerated in recent weeks with sales levels falling further behind prior year levels.

“The company has suffered from severe cash flow pressure as a result of credit insurance being withdrawn across the sector and the general market deterioration, which has led to the failure of certain key suppliers.”

It said all customer orders would be either fulfilled or refunded — adding that it had written to each of its customers in this regard.

The company said its credit card merchant services provider was holding “a substantial sum” to pay any refunds falling due.

It said all customer issues would be dealt with centrally through the call centre and not in the stores.

Phil Duffy, of joint administrator MCR, said: “Whilst a decision has not been made as to an appropriate exit route and the future of the company, the administrators will be reviewing the possibility of a sale of some or all of the company’s stores.

“In the meantime, all outstanding employee wages have been paid up to date, and ongoing wages for retained staff will continue to be paid as an expense of the administration.”

MFI is the latest in a string of household and home furnishings companies to have collapsed this year.

Sofa maker ScS Upholstery went into administration in July, before being rescued by private equity firm Sun Capital, while textiles retailer Rosebys shut its last stores earlier this month.

MFI was founded in 1964 in London by Noel Lister and Donald Searle. It took its name, Mullard Furniture Industries, from the maiden name of Searle’s wife.

It was taken over in 1985 by supermarket chain Asda, for £563million, but sold two years later for £715million in what was then Europe’s biggest-ever management buyout. It returned to the stock market in 1992 with a £669million price tag.

In September 2006, MFI’s stores were sold for £1 to private equity firm Merchant Equity Partners, a private equity firm founded by City banker Henry Jackson.

It was confident of turning around the business — and closed many of the firm’s underperforming stores.

But doubts arose over MEP’s future when, in August, US hedge fund Cerberus sold its stake in the business to buy-out specialists Hilco and investment bank Goldman Sachs.

A month later, the business again changed hands for a nominal £1, as MEP sold it to a management team led by chief executive Gary Favell.

Shortly afterwards, Mr Favell put the business into administration, but only bought back 106 of the original 192 stores.

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