MFI escaped administration last night when the furniture seller was sold to its management, allowing it to survive the dramatic downturn of home-related sales that has engulfed the retail sector.

Bought for £1 in 2006 by Merchant Equity Partners, the private equity boutique run by former investment banker Henry Jackson, turnround efforts had been stymied by the weakening economy. MEP said it had engineered a profitable exit from the business after investing about £50m.