The recent management buy-out of Coats Viyella's contract clothing division has failed to prevent large scale redundancies.

Less than a week after the completion of the buy-out, the new owners have announced that 1,200 staff are to be made redundant. The business currently employs about 4,000 people.

The redundancy programme involves the closure of two factories - one at Alfreton in Derbyshire and one at Sutton in Ashfield in Nottinghamshire. The company is also closing a warehouse at Coxmoor in Nottinghamshire.

Other staff are to be made redundant at Hinckley in Leicester, Huthwaite in Nottinghamshire and Ambergate in Derbyshire.

Coats Viyella announced earlier this year that it was ready to dispose of the whole of its contract clothing division. That announcement was made as the company unveiled a 31 per cent drop in pre-tax profits for the first half of the year.

The business supplied almost exclusively to Marks & Spencer. The retail chain has received much of the blame for developments in the business, and immediately after the buy-out the new owners indicated that they would be talking to Marks & Spencer about the level of possible orders.

The contract clothing business - currently trading under the name Marplace - now says that closures are necessary to give the company a viable future.

A spokesman said: "In taking such swift and decisive action, we both end the uncertainty that has been hanging over everyone in the business and provide a solid platform for future growth and performance."

Workers had thought that last week's buy-out had secured their futures. It had originally been feared that factories would be sold off piecemeal and that some factories would fail to attract buyers.

The buy-out team, however, immediately launched a review of its assets and working practices. It is that which has led to the new closure decisions.

By Clive Hinchliffe.