A FIRM, being put into administration after racking up massive debts, had signed a multi-million-pound deal with Derby Homes only four months ago.

Connaught provides maintenance and improvements across 14,000 Derby Homes properties.

It also has lucrative contracts with Amber Valley Housing and Derwent Living.

But, last night, the stricken repair and maintenance specialist said it was "saddened" to announce it was appointing KPMG as administrators.

Earlier it had suspended its shares after lenders refused support.

No one from the firm was available to comment on the future of its 10,000 workers.

Connaught had been in turmoil since its June warning that Government spending cuts could blow a £200 million hole in revenues.

Last night, Derbyshire housing providers were making contingency plans.

Phil Davies, chief executive of Derby Homes, said: "We will do our very best to keep services going for our tenants. We will focus on the most urgent work, gas repairs.

"We all know there have been local government cutbacks – it must have suffered because of those."

Steve Croft from Amber Valley Housing told tenants the situation with Connaught would not affect work to improve homes but there may be "some delay" in works to be carried out. He said: "We are ready to mobilise to deal with our immediate priorities – homes where work is ongoing and those where tenants are waiting for works to begin.

"This affects just 23 homes. We will be visiting those homes where work is under way.

"Our contingency plan includes working with other contractors that will be able to move in to complete works so that these homes are not left unfinished."

Mr Croft said the "good news" was that excellent progress had already been made in improving homes, with more than 99 per cent now reaching the required standard.

A spokesman for Derwent Living echoed his comments. "We are aware of the situation at Connaught but we have not officially heard that Connaught has gone into administration," he said.

"However, we are fully prepared.

"When the situation becomes more clear we can put into action our contingency plans and will be reassuring our customers that our service to them will be maintained."

Derby Homes and Connaught announced new contracts potentially worth more than £19 million in May.

Valued at £1.4 million in the first year, then £2.8 million for subsequent years, the contract was to provide gas servicing, maintenance and safety inspection works.

New heating systems were planned for installation in 2011, with new PVCu windows due to be fitted from this summer, according to Connaught's website.

Each contract was scheduled for three years, with an option to extend for a further two years to March 2015.

At the time the contract was announced, Tony Billingham, programme maintenance manager at Derby Homes, praised Connaught. "We are looking forward to working with Connaught to ensure that we continue to maintain a high standard of gas safety checks in Derby Homes properties," he said. "We are confident that Connaught will deliver a quality service that will provide us with excellent value for money."

And Bradley Groves, Connaught regional director, said: "With over 25 years' experience Connaught will offer the very best in efficiency and service."

Connaught, which started life in 1982 as a concrete repair specialist in Sidmouth, provided services to the environmental, social housing and public sector.

It is expected that rival firms such as Mears will look to take on work.

Connaught's debts were estimated to be around £220 million, while its share price had dropped by 90 per cent.