THE retail entrepreneur John Kinnaird is this weekend finalising a deal to buy struggling shoe company Faith, whose designs are worn by the likes of Denise Van Outen, Claudia Schiffer and Girls Aloud.

Kinnaird, who also owns men’s clothing firm Envy, has teamed up with Agilo, an investment fund specialising in distressed companies, which owns teenage girl fashion business Chilli Red.

The two partners plan to combine Faith, Envy and Chilli Red to create a business that would have about 155 stores and approximately 300 concessions in House of Fraser, Debenhams, and Galeries Lafayette, the major Paris department store.

Barclays bank took control of Faith, which has 2,400 staff, several weeks ago after the lender refused a debt-for-equity swap proposal by its private equity owners Bridgepoint Capital as well as a further £8m of equity.

Bridgepoint bought Faith for £64m in 2004 and has since injected a further £15m. Instead of Bridgepoint’s restructuring proposal, Barclays chose to run an auction of the business.

Kinnaird, a former business associate of the Scottish billionaire Sir Tom Hunter, has been in the shoe business before, though it didn’t end happily.

He is the former owner of Dolcis Shoes, which went bust last year. He bought the company with private equity firm Epic for £2.7m in December 2006 but a year later Epic walked away, leaving Kinnaird to find emergency backers at a time when many of Britain’s shoe retailers were battling the most difficult trading period they had faced for years.

Sources close to the entrepreneur say performance improved under Kinnaird but he wasn’t given enough time to rescue it before it was forced into administration.

Before the buyout, Kinnaird was retail director at Hunter’s company Sports Division, where he had a small stake. He joined in 1990 and when Hunter eventually sold Sports Division to JJB Sports in 1998 for £296m, Kinnaird made a great deal of money. He then went on to lead a management team that bought out Warner Bros Studio Stores.

Agilo was founded last year by Jason Granite, a former distressed debt trader at Deutsche Bank, and Milos Brajovic, founder of the trading arm of Swiss mining giant Glencore. Agilo, which counts Michael Portillo among its advisers, has bought a number of other retail companies including Sports Cafe and Ponden Mill.

Faith was founded in 1964 by Samuel Faith before eventually being sold by his son Jonathan to Bridgepoint.

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