Primark supplier Positive Clothing London has gone into administration after the retailer cancelled its contract, Drapers understands.
It is understood the fast-fashion supplier was using a UK factory – the location of which has not been disclosed – that failed to meet a Primark inspection.
The company, which employed 19 people at its head office at 20 Wells Mews in Fitzrovia, is understood to have ceased trading some weeks ago.
Paul Cooper and Paul Appleton, both of David Rubin & Partners, have been appointed as administrators.
One industry source said: “They were using the wrong factory and Primark pulled the plug. They [Positive] owe a lot of money.”
Drapers understands one Leicester-based fabrics firm is owed £900,000.
A Primark spokesman confirmed it was one of a number of Positive’s customers. “Primark did not cancel any orders, but we declined to place any new orders,” he said.
A source close to the situation told Drapers: “The staff were notified immediately and that was that. Some were left out of pocket and had to apply to the [government’s] National Insurance Fund.”
An industry observer added: “Primark is cancelling a lot of orders with factories. It is over-booking to make sure it can meet demand, but sales on the high street are bad as it has been so warm so it is phasing back orders.”