BED-giant Silentnight has been rescued from collapse today - saving 650 jobs.

The firm went into administration this weekend after failing to win the backing of creditors to cut its debts.

But it was almost immediately bought by HIG Europe, the European arm of global private equity investment firm HIG Capital.

Bosses say 1,250 jobs across the country, including the 650 at the firm’s Barnoldswick headquarters, are now safe.

The announcement has been hailed as great news by business leaders and politicians.

However it does mean the company’s pension is set to be moved into a Government protection scheme, meaning some employees’ future payouts will be capped.

Chief executive of East Lancashire Chamber, Mike Damms said: “This is great news as we always knew that Silentnight was a good business.

“With new owners and robust financial backing the business could thrive again and safeguard jobs in East Lancashire.

"It is also great that we will be able to keep one of our household names as it has been given another chance to flourish.

“The only comment I will make on pensions is that we knew pensions were a big issue for the company and, now the future looks brighter, I hope a satisfactory deal can be agreed for its participants."

Pendle Council Conservative leader Coun Mike Blomeley said: "It is superb news that Silentnight has been saved especially for the 650 people who will get to keep their jobs.

“I think I was always reasonably confident a deal would be reached to save the company as I genuinely believe it is a solid business that found itself it a difficult financial situation.

"It is good news that the government will take over the company's pension fund, despite some people finding their pensions capped at £30,000.

"I know they may find themselves receiving less money than they anticipated, but it has safeguarded pensions for the majority and enabled the company to have a future."

Silentnight hit problems last month after Clydesdale Bank withdrew services, pushing the firm into the red.

Creditors had been offered 65p in the pound of money owed in a bid to restructure historic debts.

But over the weekend the firm failed to win enough support for the Company Voluntary Agreement (CVA) and went into administration.

HIG Europe has obtained the firm’s ongoing business interests, including its brands, but not the pension scheme, which has a £100million blackhole.

It is now expected to be taken over by the government’s safeguarding Pension Protection Fund.

The final salary pension fund has around 1,500 members, but only 100 still work for the group.

If the pension does go into the PPF, members who have not yet retired will see the annual benefits they can receive capped at around £30,000 a year.

Silentnight had proposed a CVA to address an ‘unserviceable level of historic debt’ and its pension deficit.

Creditors had been due to vote on the CVA this week, but despite getting support from suppliers, employees and HM Revenue & Customs, the group failed to win the backing of the PPF, which was its largest creditor, leading to its decision to go into administration.

Neal Mernock, chief executive of Silentnight, said: "Whilst we are disappointed that the CVA was not successful, this deal with HIG Europe safeguards the jobs of our 1,250 employees and enables Silentnight to continue its proud history of manufacturing and distributing beds across the UK and Ireland.

"Silentnight is now in a much stronger financial position, with healthy short-term cash flow and the longer-term ability to invest substantially in marketing and product development."

Mark Kelly, partner of HIG European Capital Partners, said: "Silentnight is a strong, profitable business with a 21 per cent market share and a position as the largest manufacturer in its sector in the UK and Ireland.

"We are delighted to have acquired a business of this standing and heritage, and look forward to working with the current management team to further strengthen and develop its position over the coming years."