It is unclear how the closure will affect Royal Mail’s £40m-per-year, four-year print management contract with St Ives, which was signed in 2007 and has only recently expired.

A spokesman for Royal Mail said that the group was in consultation with the 36 permanent employees of iRed and that it was "seeking opportunities to save any core constituent parts" of the business.

He added: "Parts of the business may be retained by outsourcing services to other third-party providers. This option is being explored."

St Ives chief executive Patrick Martell said: "The contract expired in October and we are working to an agreed exit plan to ensure an orderly transition to the next contract arrangements, which, we would very much like to be part of and continue to provide Royal Mail with whatever services and support they require."

Accounts for iRed’s most recent financial year, to 28 March 2011, have yet to be filed; however, it posted a pre-tax loss of £10.6m in 2010 on a turnover of just £17.8m.

A spokesman said: "iRed was established several years ago as a wholly owned subsidiary of Royal Mail Group to manage print procurement for RMG and other large companies, to provide a mail opening and scanning service, and to look into possible new business opportunities.

"The business plan for iRed, which was approved at the start of the year as part of the normal budgeting process, was predicated on reducing this year the losses iRed has incurred since the business started and that iRed would progress towards a break-even position by the end of this year. Unfortunately, this has not been the case."

Meanwhile, iRed chief executive Ray Huntzinger has left the organisation under a veil of secrecy, with Royal Mail refusing to comment on the reason for, or exact timing of, his departure.

PrintWeek understands that industry veteran Declan Salter, the one-time Watmoughs chief executive and former Jarvis Porter divisional director, has been brought in to manage the business following Huntzinger’s departure.