BED firm Silentnight is to ask creditors to renegotiate its debts after a double blow to its finances.

The company, which employs 650 at its Barnoldswick head office, has entered a formal company voluntary arrangement (CVA), it announced yesterday.

The firm said it had an ‘unserviceable’ debt and a large pension deficit following takeovers in the 1980s and 1990s.

A CVA, proposing restructuring of the debts and when they are paid back, will now be put before creditors, of whom 75per cent must approve for it to take effect.

However, the 65-year-old company stressed that it remains profitable and is not set to make any redun-dancies.

Chief executive Neal Mernock said: “A CVA has been deemed the only viable route forward at this time.

“The approval of the CVA proposal by our creditors will be a major step forward in securing Silentnight’s future.”

CVAs are used by companies with unserviceable debts and can stave off the threat of administration.

The Silentnight CVA was formally filed in Manchester and creditors will consider the proposal before a meeting on May 6.

Pendle MP Andrew Stephenson said: “I have spoken to the company before about the pension deficit, although I did not realise things were getting this tough.

"Silentnight is one of Pendle’s biggest employers so I will offer as much assistance as I can to the company.”

Silentnight was founded in Barnoldswick in 1946. The firm is still family-owned and employs 1,250 people in the UK and Ireland.