Bimec was only sustained by the support of Lloyds, its only banker. Its last accounts, which showed a pounds 27.3m loss and a pounds 12.2m net deficit, were qualified because of the 'uncertainty' over its finances.
A Lloyds spokeswoman said: 'We have busted a gut to help this company.' The crunch came when Bimec asked for another pounds 2m, on top of the nearly pounds 10m already outstanding.
But Arthur Andersen, the accountants, advised Lloyds that 'there was absolutely no certainty that the money would ever be repaid'.
Roy Barber, the company doctor who took over from Sam Smith as chairman in September 1992, had attempted to save the company by savage cutbacks including the sale of its aero-engineering and air-conditioning businesses.
But problems with large contracts and a pounds 1.7m shortfall in disposal proceeds forced the company to call in the receivers.
David Duggins and John Talbot, of Arthur Andersen, are seeking buyers for the remaining businesses, which employ about 300 people.
Mr Barber, who has offered to assist the receivers, said he expected about 80 employees, including head office staff, to be made redundant.
Although Lloyds has some security it will only recover about two- thirds of the pounds 10m it is owed. The bank has already written off pounds 5m, and converted another pounds 3.5m into Bimec shares, now worthless, in last September's refinancing.
Other big shareholders include Friends Provident, the life office, and Abbey National pension fund.
Mr Barber said disposals did not produce enough cash. 'Selling this type of companies in current conditions is very difficult,' he went on. 'Generally we had poor prices for things. That did not enable us to pay the debt down to a level that we could support.'
Bimec received pounds 1.7m less than the pounds 8m it hoped for when it sold its aero-engineering activities and two water treatment businesses to EIS, the process equipment and precision engineering group.
Mr Barber said the companies' position was worse than anticipated last August and had deteriorated further by the time of completion in December.
The group was also hit by a pounds 500,000 dispute over electrical and mechanical contracting work for the Property Services Agency at Porton Down. And no initial payment was received on a pounds 3m- pounds 4m water supply contract with Belize.Reuse content