The firm, which makes own-label frozen potato products for Tesco, Iceland and Sainsbury's from its factory in Amble, Northumberland, has been crippled by cashflow problems in recent months and was forced to call in administrators earlier this week (August 18).

"Advanced negotiations" had been progressing with a potential purchaser over the last couple of days, said a spokesman from administrator Begbies Traynor. However, no deal had materialised.

“Though the company was loss-making and facing cash flow problems, we have been working hard to secure a sale to an interested party which would have rescued the company and saved the entire workforce.

"Unfortunately, despite the hard work and commitment of all concerned, this has not proved possible with negotiations failing at the eleventh hour."

Given the lack of other interested parties and the company’s substantial funding requirement in order to continue trading, Begbies was left with no alternative but to close the site down, he said.

Northumberland Foods, which used to trade as Cheviot Foods, was bought out of administration in February 2009 by its management, with additional financial backing from Northumberland County Council, regional development agency One North East and the Royal Bank of Scotland.

The firm turned over £20m last year.