Under the deal, which awaits final confirmation from a court in Bassano, Italy, Orlando Italy will control 60% of the Favini's equity, while Vepafern will hold a minority stake.

The company took over the Favini business in May 2008 and Favini's creditors have already voted 72% in favour of the Concordato Preventivo – the Italian agreement with the creditors.

If it gets the go-ahead, which is expected in November, this will complete the transfer of assets.

Favini, which sells directly to the UK, currently has a fresh balance sheet and is trading at a profit, according to marketing and export sales director Chris Brown.

He said: "We have traded profitably in the last few months and are consolidating. That's quite a story, and we have now started a three-year plan to support our long-term future.

"It is about investing in the capital interests of the company and improving productivity."

Favini also had two paper mills in Holland, which were put into liquidation earlier this year. They have since ceased trading and were taken over by Dutch administrators.

The two Italian paper mills continued to trade until the purchasers were found.

Favini has 450 staff and went into liquidation in January this year.