Habitat could be sold as early as next week with its management and restructuring specialists Hilco reported to be the front runners to buy it.
Habitat’s management led by its chief executive Mark Saunders is thought to be in a strong position to buy the business. They are more likely to keep stores open and pursue its existing three-year turnaround plan to return the chain to profit.
Hilco is more likely to break the business up but could be willing to pay more for the retailer.
Saunders joined Habitat from Levi Strauss in April and has vowed to lead the chain to profitability by 2012.
Habitat employs over 1,500 people and has 71 stores across Europe 35 of which are in the UK.