Philip Downer, chief executive of Borders U.K., and finance director Mark Little have led a management buyout of the chain, backed by Valco Capital Partners (VCP). It follows the sale of five of the company's store leases to fashion retailer New Look earlier this week.

No figures were divulged about the sale. The business was bought by the Luke Johnson backed Risk Capital Partners just under two years ago for a maximum costs of £20 million ($32.8 million). It was reported earlier in the week that Valco, part of the distressed debt specialist Hilco, was one of three suitors for the business, that launched a search for new investment last month.

"We are delighted that we have been able to secure the future for Borders in what are exceptional times for U.K. retailing and the global economy," said Downer in a statement.

Luke Johnson chairman of Borders' former backer Risk Capital said: "I am very pleased that the management of Borders are taking the business forward with a new backer, and I hope they achieve lasting success."