The crisis at Carillion looks set to deepen after it emerged that lenders to the construction giant effectively rejected a rescue plan proposed by the debt-laden group.
The Press Association understands that a business plan tabled by the group on Wednesday was knocked back because it failed to present a solid proposition for restructuring the business.
Sources also suggested that the proposal's methodology was found wanting, but talks are ongoing.
It comes as the Government, pension authorities and stakeholders meet on Friday in an attempt to thrash out a rescue package for the firm that would help it avoid collapse.
Carillion, which is struggling under £900 million of debt and a £590 million pension deficit, will use the meeting to discuss plans for securing its long-term future.
Unions have also urged the Government to step in to protect 19,500 jobs that are now at risk.
Shadow business secretary Rebecca Long-Bailey said: "The collapse of Carillion could provoke a serious crisis.
"It would have major implications for the outsourced government contracts the company holds, as well as the firm's thousands of workers, those in the supply chain and those who rely on Carillion's pension fund.
"The Government, who despite warnings carried on with its programme of outsourcing public services to this company, must stand ready to bring these contracts back into public control, stabilise the situation and safeguard our public services."
Shares in Carillion were down in morning trading on the London Stock Exchange, as investors weighed the potential outcomes of the company's ongoing crisis.
Talks between the group and lenders HSBC, Barclays, Santander and Royal Bank of Scotland have centred on options to reduce debts, recapitalise or restructure the group's balance sheet.
Carillion is a major supplier to the Government and key contractor in the first phase of building the £56 billion HS2 rail line, but has seen its share price plunge more than 70% in the past six months after making a string of profit warnings and breaching its financial covenants.
Mick Cash, general secretary of the Rail, Maritime and Transport (RMT) union, said its absolute priority at this stage is its members' jobs and their pension rights.
A Government spokeswoman said: "Carillion is a major supplier to the Government, with a number of long-term contracts.
"We are committed to maintaining a healthy supplier market and work closely with our key suppliers.
"The company has kept us informed of the steps it is taking to restructure the business.
"We remain supportive of their ongoing discussions with their stakeholders and await future updates on their progress."
The Pensions Regulator would not comment on whether it was attending specific meetings, but a spokesman said: "We have been and remain closely involved in discussions with Carillion and the trustees of the pension schemes as this situation has unfolded.
"We will not comment further unless it becomes appropriate to do so."
A spokesman from Carillion declined to comment.