Councils and housing associations will mobilise plans to replace the ailing contractor as accountant KPMG steps in to run the company

Firms like Mears, Rok, Morgan Sindall and Willmott Dixon will be sounded out by housing bodies as the future of Connaught and its 10,000 workforce remains uncertain.

A Connaught Stock Exchange update said: “Following extensive discussions with the Group’s secured lenders, it is now clear that sufficient support would not be extended to the Group as a whole to enable it to continue trading as a going concern.

“As a consequence, the Board is saddened to announce that it is in the process of appointing partners from KPMG as administrators of Connaught plc and its subsidiary, Connaught Partnerships Limited, which comprises its Social Housing Division.”

The group’s compliance and environmental divisions are not being placed into administration and will continue to trade normally.

Accountants at KPMG will now run Connaught while they seek to find a buyer for the business.

Contracts could be sold-off individually as rivals circle the remains of the firm.

John Morgan, chief executive of Morgan Sindall: “Clients have been approaching us over the last few weeks, but there has been a sharp increase in the number of approaches today.”

Bob Holt, chairman of Mears Group, said: “We are watching the situation carefully and we are ready and willing to pick up work if it becomes available, we have been approached.”

Another contractor told the Enquirer: “Now this has been confirmed it will be a case of talking with KPMG and seeing what contracts are up for grabs.

“Job losses among the site workforce shouldn’t be too bad because the staff will transfer over to new contractors or to local authorities depending who takes over jobs.

“I’d imagine the main redundancies would be office based.”