Well-known high street names such as House of Fraser, Iceland and Karen Millen, the Kent-founded fashion business, face uncertain times after their Icelandic investor applied for protection from its creditors.

Baugur Group and a number of its subsidiary companies have applied to the District Court in Reykjavik to enter into a so-called moratorium process.

The move follows a decision by Landsbanki, the nationalised Icelandic bank, to discontinue discussions on potential restructuring of the struggling investor.

The company said this action had been taken to protect the Group’s assets as well as the interests of all creditors.

House of Fraser, which has branches in Maidstone and Bluewater, moved swiftly to reassure customers, saying it was acquired by Highland Acquisitions in November 2006 and had been working with Baugur since then.

It said House of Fraser was independent, with Baugur only a minority shareholder. The moratorium would have no impact on the strength of the business or its day to day operations.

House of Fraser chairman Don McCarthy said: "This is sad news, however we can only continue to emphasise that the difficulties that Baugur faces do not affect House of Fraser’s trading or banking position. It is business as usual."

The company added that it had a good relationship with its banks and suppliers, and had continuously reduced debt ahead of schedule.

Baugur is an investment giant that grew rapidly in the past decade, with a string of investments in big-name retailers in the UK, the USA and Scandinavia.

They include Iceland, Hamleys, Goldsmiths, Whistles, Jane Norman, Mosaic Fashoins, House of Fraser.

Mosaic Fashions which owns and operates six womenswear fashion brands including Karen Millen, Coast and Oasis, as well as several shoe brands such as Nine West and Pied a Terre. Karen Millen, the founder of the fashion chain named after her, grew up in Maidstone and was a student at Kent Institute of Art and Design. The college, now the University for the Creative Arts, awarded her an honoraroy fellowship in 2002.

The millionairess mother-of-three and business partner Kevin Stanford shared a £54m payout when they sold the business some five years ago.

Companies related to Baugur employ some 50,000 people worldwide in over 3,500 stores with a total turnover of £5.4 billion.

Last year, Baugur was awarded the President of Iceland’s Award for Export Achievement in recognition of the outstanding contribution to promoting and stimulating Icelandic exports as well as for leadership in the Icelandic expansion abroad and the unique success the company has achieved in the field of retail.