UK construction firm ISG has collapsed.

ISG Central Services Limited, ISG Interior Services Group UK Limited, ISG Fit Out Limited, ISG Engineering Services Limited, ISG UK Retail Limited, ISG Retail Limited, ISG Construction Limited, and ISG Jackson Limited have entered administration.

"ISG’s UK operations have ceased to trade with immediate effect," the company said. "No further work will be undertaken on existing UK contracts, including for construction, fit out, and engineering services."

EY has been appointed as Joint Administrators. The administrators said they are contacting all known customers of the companies directly in writing.

Despite rumors of a planned sale over the summer, EY said on Friday that no potential buyers that had come forward were able to show they had enough money to finance the operations and keep them afloat in the future.

"Whilst there has been misleading speculation surrounding the potential sale in the last few days, we wish to be clear to employees, suppliers, and customers that it was not possible to conclude a sale as the potential purchaser could not, despite repeated requests of them to do so, adequately demonstrate that they had the funding needed to recapitalize the business and keep it solvent," the administrators said.

"Due to current market conditions, an alternative sale or additional funding could not be secured. As a result, the directors made an application to court to place certain UK trading entities of ISG in administration."

Founded as Stanhope Interiors in 1989, London-based ISG (formerly Interior Services Group) was a privately-owned, construction company and sixth biggest contractor in the UK by turnover.

Floated on the London Stock Exchange in 1997, it was taken private by US-based Cathexis shareholder for £85m in 2016.

The business held more than £1bn ($1.33bn) in government contracts and counted Apple, Barclays, and Google among its private sector customers.

It won a contract to build a 30MW data center in Slough late last year, and was contracted to build a Colt data center in Hayes that was recently topped out. DCD has reached out to Colt for comment.

The firm had reportedly been struggling financially for some time. In an email to staff last week, ISG chief executive Zoe Price said the situation had arisen due to "legacy issues" relating to "large loss-making contracts" secured between 2018 and 2020.

Some of those loss-making contracts include data center projects, she said.

BuildingDesign reports ISG had been dropped from three data center projects in recent weeks.

Some 2,000 staff at the company have been made unemployed. Many suppliers are likely to go unpaid in what is the largest collapse in the construction sector since Carillion went into liquidation in 2018.

Andre Redinger of Antipodean Holdings said a "fair deal" had been on the table to acquire ISG, but ISG decided to choose administration.

Price said that US owner Cathexis had also explored refinancing and selling individual business units, but none of these strategies came to fruition within the required timeframe.

The UK government is said to be executing contingency plans to deal with the various contracts it had under construction with ISG.