Around 55 workers at the Co Mayo bakery firm, Allfresh Products Ltd, are to be made redundant after a receiver was appointed to the company.
It is understood Allfresh, based in Charlestown, has substantial debts. It has been trading since 1978 and was a major supplier of fresh cakes to supermarkets like Superquinn, Tesco and Dunnes Stores.
The decision by Superquinn, its biggest customer, to terminate its contract before Christmas was a major blow to the company, which has been accumulating large debts in recent years.
A spokeswoman for Superquinn confirmed it had terminated the contract but would not disclose the reasons. Allfresh's business with Tesco was confined to a small number of the supermarket's stores in the west.
The company refused to comment on the job losses and referred all queries to the receiver Mr Rory O'Ferrall of Deloitte and Touche. He said last night he was hopeful the plant could be sold as a going concern.
He was appointed by ICC Bank which is understood to be owed about £250,000 by Allfresh. Bank of Ireland, the Revenue Commissioners and several ingredients suppliers are also owed money.
Mr O'Ferrall said it was not possible to specify the exact sums outstanding at this stage.
It is expected that employees will be let go this week and will receive only their statutory entitlements.
The company made some large investments in its Charlestown site, which occupies two acres, in recent years, but there were still problems with production. Allfresh operated its own distribution network but the costs involved were high because of its distance from many of its customers.
Most of the company is owned by members of the O'Donoghue family, who live locally, although Forfas also had a stake.
Mr O'Ferrall said the recent investments in the facility should be an advantage when he attempts to sell it.
The company employed more than 80 people up to two years ago but has been cutting back as financial pressures mounted.
In 1997 it had £2.5 million in fixed and current assets, but had current liabilities of £1.13 million, according to records lodged with the companies' office.
