COSALT Holiday Homes has been rescued by its former management in a deal that will save the company and safeguard about 20 jobs.
Following the management buy out, production is set to resume at the group's one remaining factory in Hull.
A three-strong executive team, led by former sales director James Garland, has bought the intellectual property rights, goodwill and plant and machinery as well as taking a five-year lease on the firm's Stockholm Road facility in Hull.
Production at the site stopped a week ago and the business was being wound down with a view to selling it or breaking it up and selling the assets.
The price paid by the management team has not been disclosed, but is thought to be a nominal sum.
Cosalt Holiday Homes employed about 40 staff just a few months ago, but this was whittled down to 20 before recently being reduced to just 11.
Now the plan is to get the workforce back up to 20 staff in the next few weeks and months in order to meet new production targets.
The firm will stop building caravans and switch to holiday lodges, an area that is seeing strong growth as people demand more luxury from their UK holiday home.
The high-quality lodges will be sold to the leisure and UK holiday industry.
While there is considerable over-capacity in the caravan market, fewer companies are making holiday lodges.
Lodges also offer manufacturers much better profit margins than caravans, which are seen as a high volume and very price competitive market.
Former sales director James Garland, who is taking over as managing director of the company, said: "We have rescued a viable and reputable business that has a great deal of potential.
"We now have to work hard to up-skill the business from being dormant to returning to steady production very quickly."
"We will be inviting applications from the former Cosalt employees for the new jobs and we are confident that we will be able to fill the skilled positions from this source."
He added. "We hope to steadily build the business to becoming a major employer again in the years to come."
The other two members of the executive team include Martyn Hadfield, a 25-year veteran of Cosalt, who will also take a stake in the firm and continue in his role as operations director. The third member is Malcolm Mathieson, who joins the business as finance director and shareholder.
The deal was structured by BTG McInnes and backed by private investment with working capital facilities provided by HSBC.
Leeds corporate financier Will Arnold of BTG McInnes Corporate Finance said: "The business that the team has acquired is a reputable and viable manufacturer, and has a great chance to grow from base with a great product, excellent manufacturing capability, a highly skilled workforce and a book of orders and strong leads.
"That any aspect of the Cosalt business could be saved is good news, given the seriousness of its problems."
Production is expected to resume within weeks. A strong order book and pipeline of enquiries from leisure operators and holiday parks across the country is anticipated to deliver between 60 to 70 units in the next 12 months.
Cosalt Holiday Homes was bought by Leeds-based turnaround fund Endless last October after parent company marine specialist Cosalt plc struggled to find a trade buyer for the ailing caravan business.
More than 280 workers lost their jobs last year after Endless closed a caravan manufacturing site at Stoneferry Road.
Endless claimed the Stoneferry Road operation was losing 750,000 a month because of falling consumer confidence, brought on by the threat of recession and a slowdown in the property market.
But earlier this year Hull-based petroleum company JR Rix bought the mothballed factory at Stoneferry Road and gave the running of the operation to former Cosalt Holiday Homes managing director Peter Nevitt.
Last week the first model rolled off the production line and now more than 30 people are working at the site.