A temporary employment agency has this week submitted documents preparing the company to enter insolvency.
It was confirmed that Transline had filed the notice of intention of appointing administrators to a court in Leeds.
Taking this step gives secured creditors advance notice that there is a possibility that an administration process may be imminent.
It has been a difficult couple of years for Transline, which was one of two agencies caught up in a Guardian investigation into allegations that temporary workers at a Sports Direct warehouse were being paid less than the minimum wage.
At a parliamentary select committee last month it was suggested the business had failed to honour part of a deal which was struck to ensure £1million back pay was made to those members of the workforce affected.
The firm has also recently lost the job of supplying temporary staff to the online retail giant Amazon.
A Transline spokesperson said: “The company has suffered as a result of a continued move to tighter margins in the recruitment industry.
“We are close to securing inward investment that will allow us to drive forward with continued growth and infrastructure development, and have lodged the ‘notice of intention’ to protect the business, our employees and our customers as we complete this process.
“The welfare of our staff and our relationships with our customers are of paramount importance, and we are continuing our service and operations as normal. We expect to hear more regarding potential trading investments imminently.”
This comment appears to conflict with a previous statement made to The Guardian towards the end of March, when a spokesperson suggested there was no “imminent need” for funds.