The parent company of one of the UK's largest milk hauliers says it is seeking legal advice after accusing a bank of putting it into "wholly unnecessary" administration.

Lloyd Fraser, which has a distribution centre in Four Crosses in North Powys, went into administration overnight on Friday (September 22) leaving farmers uncertain whether their milk would be collected.

Some of the country’s biggest dairy companies including Muller, Arla and Meadow Foods were making contingency plans for milk collections last week.

But now Lloyd Fraser's parent company Barbican Capital has accused Close Brothers of using "tactics tantamount to bullying" adding that it will fight the administration and "seek justice" for the actions of the bank.

Close Brothers said it is unable to comment "on what is a live situation, other than to state that it strongly disputes Barbican Capital’s characterisation of the events in question”.

A spokesperson for Barbican Capital said: “Barbican Capital is contesting the decision to put the Lloyd Fraser group of companies into administration as a consequence of the actions of Close Brothers Limited and Close Invoice Finance Limited.

“Our immediate priority is to ensure that our employees and our customers are impacted as little as possible from Close’s actions. Once we have done so, we will look to Close to seek compensation for the material losses that they have caused to the Lloyd Fraser group for putting it into administration when it was wholly unnecessary.

The company said it was "incorrectly" placed into administration, adding that the move had a "major impact on the supply of milk in the UK, as well as the fashion industry – two sectors which Lloyd Fraser Holdings provides vital logistical support to".

It also said the company was solvent at the time of the move.

“This goes way beyond the closure of a bank account," the statement added. "This is ‘debanking’ on a terrifying scale which will have an impact on hundreds of employees, the UK’s hard working milk farmers and the nation’s industry."

Barbican claimed it had decided to cease its relationship with Close as a banking partner, and had been due to pay outstanding monies owed on September 29, but was told that Close refused to operate its banking facility as normal on September 1, forcing the Lloyd Fraser group into administration "literally overnight".

"We believe that these tactics from the bank are tantamount to bullying and are aimed at a group of companies which were on the upward trajectory, creating jobs and meeting our customers' needs," the statement said.

"Close's actions and the subsequent administration from those actions have left 700 committed Lloyd Fraser employees uncertain as to whether they will have a job next week.

“Close Brothers’ behaviour now risks a default on a Covid loan from the British Business Bank, which was essential to ensure the continued operation of our business and supply to our customers during the pandemic.

“With all of these factors in mind we have engaged a legal team to fight this administration and seek justice for the actions of Close."