Sofa Workshop is teetering on the brink of administration as it faces financial difficulties in the tough economic climate.

The 30-store retailer filed a notice of intention to appoint an administrator to the Companies Court on December 23.

Administrator Leonard Curtis has been put on standby but a spokeswoman for the restructuring specialist said the retailer was in last-ditch talks about its future and was not yet in administration.

Sofa Workshop was unavailable for comment.

Sofa Workshop auditor BDO Stoy Hayward expressed reservations about the furniture retailer’s future in its accounts for the 12 months to May 31 filed at Companies House. The auditor noted that Sofa Workshop is reliant on the continuing support of its shareholders and that there are “no other finance facilities in place”.

In the year to May 31, Sofa Workshop posted a£2.7 million pre-tax loss against a loss of£3.3 million for the 17 months to May 31, 2007.

Sofa Workshop was bought for£1.8 million from MFI in 2006 by rival furniture retailer New Heights, which went into administration in May last year. When Sofa Workshop was rescued by a consortium of existing shareholders at the time of New Heights’ collapse,£1.9 million was lent by the new owners.