RFS Industries, which builds and refurbishes railway wagons and underground trains, had won a pounds 76m contract from London Underground for the refurbishment of Piccadilly Line trains and a pounds 6m contract for locomotives for the Jubilee Line.
Richard Rees and Gordon Horsfield of Price Waterhouse were appointed as receivers by Barclays Bank yesterday. More than 700 jobs are at risk. Mr Rees said management had failed to find a new business partner or investor.
Mr Rees said: 'RFS was a management buyout from British Rail in 1987. It was under-capitalised from the start. It did not have the ability to borrow enough to cover the level of business it was doing.
'We have had a good meeting with London Underground and they want to support an LU supplier on this site.'
Mr Rees said jobs were at risk and that management was already planning 200 redundancies in early 1994 as a result of a reduction in business levels.
RFS Industries was formed by a management buy-out from the former Doncaster Wagonworks division of British Rail. It diversified from wagon-building into overhauling underground trains, and provided the recently-refurbished trains on the Circle Line. Last year RFS had a turnover of pounds 45m.
London Underground said: 'We did not expect this to happen and are talking to the company about it. There's an awareness of problems for all train builders at the moment. Unfortunately in the last few years there hasn't been much of a market (for their products).'
Mr Rees said he would be approaching parties previously interested in taking over RFS but who had been discouraged by its extensive liabilities.