Habitat's credit insurance risk

Credit insurers have threatened to withdraw cover to suppliers of Habitat, the home furnishing chain, if it is bought by Hilco, the retail restructuring group..

Hilco, which recently put the bookseller Borders into administration through its Valco private equity arm, is thought likely to beat off a rival management-backed bid for the Habitat chain. Habitat is owned by the Kamprad family – heirs to the Ikea fortune.

One insurer, who declined to be named, said: "We've seen what Hilco has done in the past putting businesses into administration so if it buys Habitat then we will have to reassess our position."

Habitat has 35 UK shops and creditors to the company, including credit insurers, fear that a successful Hilco bid could see the retailer plunged into a pre-pack administration process.

The withdrawal of credit insurance has been a factor in the downfall of a number of British retailers, including Woolworths last year.