Luxury fashion house Escada will consider requesting state aid to secure its long-term growth if it is successful in securing refinancing to avoid insolvency.

The beleaguered group, a favourite of celebrities such as Demi Moore and Katie Holmes, is asking investors to forego more than half of their investments in a bond swap to exchange €200m (£172.2m) in seven-year bonds by the end of July to get support from its banks. At least 80 per cent of bond holders will need to accept the terms for it to be passed.