Sources have told the Enquirer the firm ran up big debts on the back of losses on a number of large and complex energy from waste contracts.

Despite negotiations with key stakeholders to resolve issues caused by the losses, mounting pressures on the business and the failure to secure £20m of bonding forced directors to call in KPMG.

Administrators have yet to confirm the directors’ statement of affairs but rumours of the high level of debt started to emerge after parters at KPMG were appointed on Friday.

Up to 150 staff from 412 working for the Clugston Group and main construction business were laid off on Friday.

Administrators will continue to trade certain divisions and are seeking to sell valuable contracts, with 262 staff retained to assist.

Clugston was operating from over 25 sites primarily across the North and Midlands when it collapsed.

The haulage arm Clugston Distribution Services and small property business Clugston Estates are not affected by the present administration process and are continuing to trade under the control of their directors.

James Clark, associate partner at KPMG and joint administrator said: “The directors of the business have worked tirelessly trying to rescue the group and have pursued discussions with a key stakeholder about a potential rescue deal. Unfortunately, it has not been possible to obtain the funding required.

“Our focus over the coming days will be to seek buyers for the contracts and divisions, and to liaise with those employees who have been made redundant”

Despite filing a notice of intent to file for administration last week, the £17m revenue Clugston Distribution Services business continues to trade as normal.

Its director Tim Doggett, said: “We are a standalone entity and will continue deliveries as scheduled.

“We are working closely with various stakeholders to ensure continuity of supply and we thank our suppliers, customers and of course our employees for their continued support.”