Around 2,500 jobs at collapsed firm Connaught were rescued after administrators struck a deal to sell the bulk of its social housing division.
The £28 million deal with construction firm Morgan Sindall comes two days after the appointment of KPMG as administrators for the main company, and its subsidiaries Connaught Partnerships and Connaught Technical Solutions.
Morgan Sindall confirmed that its affordable housing division, Lovell Partnerships, had reached an agreement to acquire the majority of the ongoing contracts and assets of Connaught's social housing business.
Leeds-based Connaught Partnerships, which was the largest division placed into administration, employs 4,400 staff across the UK. While the deal will be a relief to many, some jobs remain at risk of redundancy.
The Company posted operating profits of £14.9 million in 2009. The type of contracts it had taken on involved both response and planned maintenance work.
Connaught was thrown into turmoil after warning in June that Government spending cuts could blow a £200 million hole in revenues over this year and next.
Bosses at Connaught held crunch talks with its lenders, led by taxpayer-backed Royal Bank of Scotland, and other potential financiers in a bid to keep the Company afloat.
But it finally told investors it was left with no option other than to start the process of administration after failing to secure further financing.
Staffordshire-based Lovell said its newly-acquired contracts would generate around £200 million in additional annual revenues.
John Morgan, executive chairman of Morgan Sindall, said:
""This is a step change for Lovell. The acquisition significantly increases the scope and scale of our planned and reactive maintenance activities and further develops our market leading position.
"Our focus now will be to ensure a smooth handover of the contracts and to minimise disruption to essential maintenance services."
It was also reported that more jobs could be rescued as part of a deal between administrators and Gloucester-based Mears Group.
Mears, the social housing repairs provider, is expected to take on eight Connaught contracts in a move expected to save some 1,000 jobs.
