Lloyd Fraser's parent company, Barbican Capital, is seeking financial compensation after the milk haulier was 'incorrectly' place into administration.
Lloyd Fraser, which is one of the UK's biggest milk hauliers, collects milk for major dairy processors including Arla, Muller and Meadow Foods.
It went into administration last week, causing concern that thousands of litres of milk could go uncollected.
Now Barbican Capital, the logistics company which owns Lloyds Fraser and others, is contesting the move, blaming "the actions of Close Brothers Limited and Close Invoice Finance Limited".
Barbican said it was 'appalled' by their 'incorrect' decision, which had "led to our group of companies... unnecessarily losing related licenses required to meet our customers' needs".
A Barbican Capital spokesperson said: “Our immediate priority is to ensure that our employees and our customers are impacted as little as possible from Close’s actions.
"Once we have done so, we will look to Close to seek compensation for the material losses that they have caused to the Lloyd Fraser group for putting it into administration when it was wholly unnecessary.”
The spokesperson added: “The actions of Close Brothers has had a major impact on the supply of milk in the UK, as well as the fashion industry – two sectors which Lloyd Fraser Holdings provides vital logistical support to.
"Without any warning, our employees, their families, and our customers have seen their employers and suppliers, each a viable business, closed quite literally overnight due to the unnecessary and irresponsible actions of Close Brothers, despite the solvency of the companies."
Barbican Capital slammed the move into administration as "debanking on a terrifying scale", as it would impact hundreds of employees, including many dairy farmers.
The spokesperson said: “These communities have felt the unnecessary consequences of what we consider to be major flaws in Close's IDEAL client interface portal, which we recently discovered caused huge financial issues for and underfunded our business.
"On identifying these problems Lloyd Fraser understandably looked to replace Close as our banking partner. This was communicated to Close and an orderly handover was agreed for the end of September.
"As part of this transition, any monies owed to Close by any Lloyd Fraser company would be discharged in full on or around 29 September 2023.
"However, on 1 September 2023, without warning, and in breach of the agreement to migrate our business away from Close in an orderly manner, Close refused to operate our facility as normal.
"This has subsequently led to the Lloyd Fraser group companies being put into administration quite literally overnight."
The spokesperson added: “With all of these factors in mind we have engaged a legal team to fight this administration and seek justice for the actions of Close."