The online party goods supplier founded by the Princess of Wales’s parents has been sold after it failed to avoid collapsing into administration.

Sky News has learnt that Party Pieces Holdings, which was launched by Carole and Michael Middleton in 1987, was bought on Thursday by James Sinclair, an entrepreneur.

Sources said the sale had been implemented through a pre-pack administration, meaning it had appointed insolvency practitioners before being sold without some of its liabilities.

It was unclear what price Mr Sinclair’s company, Teddy Tastic Bear Co Ltd, had paid or how big the liabilities were that had been left behind.

According to his personal website, Mr Sinclair “operates a £30m business which includes leisure, childcare, outdoor attractions, commercial property, arts and crafts manufacturing as well as one of the UK’s oldest ice cream companies; The Rossi Ice Cream Company”.

The Middletons’ preferred option had been to sell Party Pieces with a dowry and avert insolvency but this proved impossible, according to insiders.

Interpath Advisory is understood to have been appointed as administrator in court on Thursday morning.

Other leading bidders for Party Pieces included Club Green, a family-owned business which has also operated for decades in the party goods sector.

The Middletons, who conceived of the business as they were seeking inspiration for daughter Kate’s fifth birthday, instructed Interpath to find a buyer earlier this year.

Originally set up to organise imaginative children’s parties, the business expanded into selling party decorations, tableware and personalised gifts.

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The pre-pack sale comes just 12 days after the King’s coronation, their daughter’s father-in-law.

According to information circulated to potential bidders, Party Pieces had shown “some recent UK performance contraction during international expansion and focus on margins”.

Trading is said to have been severely impacted by the pandemic and the company is reported to have made losses in the last financial year for which accounts have been filed.

Interpath declined to comment.