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Sofa retailer ScS has suspended its shares this morning following the announcement it is in buy-out talks with an unnamed party.

ScS said it has received an approach to buy its trading arm, which operates nearly 100 stores all over the UK.

The sale would resolve the company's working capital issues and ensure all suppliers would continue their relationship with the business, ScS said.

In a statement, ScS added: "However, as these discussions have developed, it has become clear to the directors of ScS that the extent of the additional working capital funding required may result in only negligible value being attributed to the shares in ScS Upholstery."

In effect, stock in the remainder of the company will become worthless. The retailer immediately suspended shares in the company after the announcement.

ScS said it is in exclusive talks with the buyer, in order to speed up the process, and due diligence is underway.

Sales at ScS have fallen sharply this year, as consumer confidence has fallen and the property market slumped.

Earlier this month credit insurers said they were withdrawing cover from the sofa chain's suppliers, which means the suppliers would have to bear the cost if ScS were to default on its payments.

The company held crisis talks at the weekend, and there is speculation that ScS could fall into administration if the deal does not go through.