FRANKFURT, May 26 (Reuters) - Escada (ESCG.DE) sold almost all of its mid-price fashion business Primera to a financial investor, the group said on Tuesday 26 May, in a bid to salvage its finances after warning it could go bust within weeks.

Escada collection spring-summer 2009

The stricken luxury fashion house, whose gowns are worn by Hollywood stars such as Katie Holmes, has been struggling with falling sales as recession compounds difficulties it is having selling its clothes, which some have labelled old fashioned.

Escada has warned that it could go bust as early as July unless it raises fresh capital, cuts debt and secures new loans.

The sale of Primera will go some way to helping it out of difficulty. Nonetheless, the disposal has led to a hefty writedown, pushing Escada further into the red.

Financial investor Mutares agreed to buy three of the four Primera brands -- Laurel, Apriori and Cavita. Escada will keep a 10 percent stake in the brands.

It will conclude the sale of the fourth Primera brand, Biba, soon, Escada added.

Escada shares fell further after the news and were down 6 percent at 2.82 euros by 1215 GMT.

(Reporting by Eva Kuehnen)