Furniture firm closes after spurning £1m

HJ Berry in administration after saying TV show's offer had too many conditions

When Sir Gerry Robinson promised £1m of his own money to save Britain's oldest surviving furniture manufacturer from collapse as part of his Channel 4 business rescue series last summer, many observers were stunned at the apparent generosity of the offer. So when HJ Berry & Sons, which has been producing rush-seat chairs in the Lancashire village of Chipping for five generations, turned him down flat, there were even louder gasps of disbelief.

Yesterday it emerged that the family-run business, which prided itself on not having sacked an employee for 60 years, had finally yielded to the pressures of cheap Asian imports and the strength of the euro, collapsing with debts of at least £3.5m.

All 85 staff were told they will lose their jobs in an emotional letter from the current owner, Andrew Berry, who became an unlikely star of Sir Gerry's Big Decision, which was watched by millions of viewers.

Mr Berry told employees that the final straw was due to a "large hole" in the company's £9m pension fund, though it is believed that all 100 people linked to the scheme will be covered under the Pension Protection Fund. The main creditor is understood to be HM Customs and Revenue.

His letter posted to employees on Monday laid out the situation in stark terms: "We have all lost our jobs and the shareholders have lost everything." The company is expected formally to go into administration on Monday.

A source close to the administration said that Sir Gerry's offer had been a "red herring" and that the cash offered in exchange for 60 per cent of the company had been "pathetic" with the overwhelming majority of the £1m coming in the form of conditional loans. At the time the lifeline was hailed as the largest sum ever handed out on a TV programme other than Who Wants To Be A Millionaire?

The former Granada chief executive said he believed he could turn round the company's £700,000 debt and make the business worth £5m within a decade. But the management team concluded that there were too many strings attached and decided to soldier on alone instead. Sir Gerry was unavailable for comment yesterday.

Mark Getliffe at Manchester-based CLB Coopers, who has been providing insolvency advice to Berry's, said: "The directors have struggled to compete with cheap foreign imports and the business has been hurt by the strength of the euro. It's also true that the UK market for bespoke traditional furniture has diminished. Clearly, it's a very sad day for the UK furniture industry."

But the closure will end a long tradition which has sustained the village of Chipping in the Bowland Forest since 1840. The company moved to the site of the old cotton mill in 1880 and was still powering its works with an original Arkwright water wheel until the Second World War.

The process has been complicated by the company's philanthropic tradition. It owns 15 cottages in Chipping which it provides to workers and former employees at below market rents and is negotiating to sell them to a housing trust to help pay off some of the debts.

The closure was being monitored anxiously by Chipping's 1,000 residents yesterday. Paul Hunt, who runs the village shop and gallery Brabin's, which has a showroom selling Berry furniture, said the manufacturer gave the place its identity. He said: "It will have a huge impact. A lot of people were employed there but it will mean more than that. It is the end of a tradition going back 160 years, and they were at the heart of the village in so many ways, supporting everything that went on. There are a lot of fathers and sons and grandfathers that have worked there. This will be a big knock."