The Edinburgh Woollen Mill chain is in difficulties

Retail billionaire Philip Day is understood to be in rescue talks with US hedge fund Davidson Kempner Capital Management to re-finance his troubled Edinburgh Woollen Mill empire. 

Mr Day is thought to be offering a stake in the group’s Peacocks business in exchange for support from the New York-based investment firm which has more than $30billion under management.

EWM is talking to advisers at FRP Advisory in an attempt to avoid administration and the threat to more than 21,000 staff across its porfolio which also includes Jaeger, Jacques Vert and Austin Reed.

Peacocks has been the best performer and enabled Mr Day to acquire other businesses such as Bon Marche which is not part of the filing.

But the group, which switched its headquarters from the Scottish Borders to Carlisle, is sharing the general malaise across the retail sector, particularly as many of its 1,100 stores are tourist-focused locations.

The rescue plan hinges on a deal to sell a stake in Peacocks, possibly as much as 25%, according to MailOnline, that would steer the business though what could be a desolate Christmas trading period. 

There has also been speculation over a potential sale of parts of the business.