Managing director Alan Mitchell confirmed staff at the company had been informed of the situation, which he blamed on factoring companies, but added that the company had not begun insolvency proceedings.

Mitchell said that a letter had been sent to all employees at the 100 staff company's three plants in Harlow, Mitcham and Shoeburyness on 1 February, informing them that Blue was no longer in a position to pay wages.

The letter states: "We regret that, due to the company's financial difficulties, the company is no longer in a position to make payments to you for services rendered. It is likely that the company will enter formal insolvency in due course."

Mitchell said that the company was currently waiting for advice to see where it would "go from here", but confirmed that it had not ceased trading at the time of writing.

He said: "Our factoring company held £600,000 of invoicing that they would not let us draw down on. They asked us for £368,000 to buy out, which is ridiculous when they have stopped us drawing down money.

"We got another factoring company to take the invoices on, but they did exactly the same thing to us. They wouldn't even give us the money to pay wages. We couldn't pay anyone."