Jon Moulton, one of the best-known figures in private equity, suffered a setback yesterday when a company he invested in just 18 months ago called in the administrators after sales collapsed.

Alchemy Partners, a private equity vehicle founded by Mr Moulton, backed the £52 million management buyout of Floors-2-Go, Britain's biggest wood and laminates flooring retailer, in December 2006.

The investment came as high street retailers across the UK were bracing themselves for a sharp downturn in consumer sentiment. At the time, management described the retail environment as “challenging” and Floors-2- Go had already issued one profit warning that year.

It is understood that trading at the retailer has deteriorated sharply since February, with like-for-like sales sliding by more than 20 per cent in recent months.

Yesterday it emerged that Floors-2- Go had brought in Kroll as administrators to try to sell the business as a going concern or break it up. The sliding housing market and a slump in do-it-yourself home improvements was blamed.

As recently as last month Mr Moulton denied that Floors-2-Go was facing financial meltdown. He dismissed speculation that a restructuring firm was about to be called in and said he was comfortable with Floors-2-Go's debt position.

Although Floors-2-Go had surplus cash, it is thought that it breached the terms of covenant agreements with its bankers at National Australia Bank.

Mr Moulton is best known as the man who tried to buy Rover, the carmaker, from BMW almost eight years ago. He was frustrated by an eleventh-hour bid from a consortium put together by John Towers, a former Rover chief executive.

Kroll has shut 41 of Floors-2-Go's 132 stores and 97 staff have been made redundant. Floors-2-Go is based in Birmingham and employs 450 retail and head office staff. Kroll said the business will continue to trade while the options are reviewed.

Floors-2-Go's website was operating normally yesterday, offering sales prices and a “clearance blitz”. All existing orders and deposits will be honoured, Kroll said. Mr Moulton was travelling and unavailable for comment. Alchemy declined to comment.

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