Building firm DB Russell Construction, which is based at Clevedon near Bristol, has gone into administration.
The company, which works with local councils and housing associations and employs 30 people, owes about £2m, its administrators said.
Tim Ball, from the administrators Mazar, said debt accrued in a previous takeover had led to the current problems.
"[It] resulted in huge amounts of money owed to creditors," he said.
Mr Ball added that there was "interest from different parties" in taking over the business.
The firm is thought to owe £900,000 to companies it has sub-contracted work to, £370,000 to suppliers and £620,000 to banks.