Jaeger fashion brand sold to Jon Moulton in £20m rescue deal

Harold Tillman has sold his majority stake in Jaeger, the business he saved from collapse nearly 10 years ago. Photograph: Ian West/PA

The Jaeger fashion brand has been sold in a rescue deal as the retail empire built by one of the UK's best known rag traders unravels in the high street downturn.

Harold Tillman, who is chairman of the British Fashion Council, sold the business to distressed debt expert Jon Moulton's Better Capital for just under £20m with "substantial majority" used to settle its debts. Moulton is best known for his failed attempt to rescue another historic British brand, MG Rover.

Tillman is also locked in talks about the future of one of his other investments, the loss-making Aquascutum clothing brand, which he has owned since 2009.

In its heyday, Jaeger dressed Audrey Hepburn and the Duchess of Windsor, but by the 1990s it was more country set than jet set. When Tillman acquired it for an undisclosed sum in 2003 it had been losing money for several years. He drafted in former Debenhams chief executive Belinda Earl to lead the turnaround and appeared to be making progress thanks to more fashionable products and new ranges such as the upmarket Jaeger London brand, which it shows on the catwalk. But the success proved to be short-lived; in its last set of published accounts, for the year to the end of February 2011, operating profits had more than halved to just £1.4m on sales of £94m. At that time the company warned "the impact from falling consumer confidence is proving challenging". People familiar with its more recent performance said the picture had deteriorated since then with the retailer likely to be loss-making this year.

Better Capital specialises in company turnarounds and last month bought double glazing firm Everest. With debt of £13.4m and climbing this time last year, its intervention enabled Jaeger's lender, Bank of Scotland, part of the state-backed Lloyds Banking Group, to be repaid and the company to survive. "The board is pleased that Jaeger has a new owner in Better Capital, thereby securing the future of the business," the retailer said in a statement. "The investment that Better Capital has provided will create a strong foundation."

Tillman's stake in Jaeger has been cut from 70% to 10% but he will stay on as chairman.

The deal was done swiftly with Moulton only starting to study the numbers "about a week ago" but he said: "The potential is obviously there. It's a fantastic brand name and has got some very good sites and people."

Jaeger was founded in 1884 by an accountant, Lewis Tomalin, who was inspired by a health craze promulgated by Gustav Jaeger, a professor of zoology from Stuttgart, who believed humans would be healthier if they dressed in clothing made from animal hair, wool and fleece. The first shop was called Dr Jaeger's Sanitary Woollen System. The retailer has 50 stores and 70 department store concessions with closures said to be inevitable. Retail experts suggested it might also sell the valuable lease on its flagship store on London's Regent Street.

When Tillman took on Aquascutum he created a group with combined sales of more than £300m but the brand, which was founded in 1851 by the Mayfair tailor John Emary, has a troubled financial history. He also acquired it without the rights to the important Asian market. They are owned by Hong Kong-based YGM Trading and insiders said it would make sense for it to acquire the rest of the business, although heavy investment is said to be required.