Lenders to value fashion group Peacocks have called in KPMG to conduct an independent business review as fears grow that the retailer is in danger of breaching its banking covenants.

Peacocks is under pressure to restructure its debts, which last year wiped out profitability, the Sunday Times reported.

The retailer was saddled with heavy debt after being taken private in 2005. The £400m deal, involving Peacocks’ management, Goldman Sachs and hedge funds Och-Ziff and Perry Capital, was financed by £350m of debt as well as £50m of equity.

Last year, Peacocks’ £27.8m operating profit was eradicated by finance charges that left the retailer nursing a £56.7m pre-tax loss.

Sales increased 6% to £720.9m in the year ending April 2010, accounts show. Net debt stood at £577.9m and the retailer had borrowings of £647m.