The two Tunbridge Wells-based businesses, which are located in the same building and have shared ownership, failed after the loss of a major contract at True Colours.

The company's staff had been asked to take a 10% pay cut to mitigate the effects of the lost contract, but chose to go into consultation rather than take the cut, which managing director Mark Wood said was unpractical considering the immediate need to reduce the business's overheads.

"We lost a contract in the middle of May and had to act quickly. We approached the staff with regards to a voluntary pay cut, but they rejected the offer and chose to go into consultation," he said.

He added that the contract was lost to a local rival who had quoted a price 55% below what True Colours was currently charging, which was close to cost.

"Prices are being cut by printers desperate to keep the machinery running," he said. "With the contract loss and the effects of the recession, we had no choice but to go into voluntary liquidation."

The two companies employ 19 staff between them. Kingston Smith is expected to be appointed liquidator at the meeting of creditors.