The group was originally backed by HBOS, which was taken over by Lloyds TSB to form Lloyds Banking Group at the height of the credit crisis in the autumn of 2008.

The loss will strike another blow to the bailed-out bank, as it was revealed at the weekend that not all of the £450 million ploughed into another failed property company, the Rock empire of entrepreneur Paul Kemsley, will be recovered. 

Kilmartin Holdings and Kilmartin Property Group were handed to PricewaterhouseCoopers, the accountant, late last week, whilst another subsidiary, Annfield Assets, went into administration.

However, PricewaterhouseCoopers added that the group had a number of subsidiary companies that were still solvent, and would be unaffected by the insolvency process.

The developer was founded by property entrepreneur Ian Wotherspoon in 1996 and received about £500 million from HBOS during the years of the property boom. In October 2008, Mr Wotherspoon praised the “foresight and flair” of the doomed bank, and said the company owed its existence to its help.

Kilmartin’s portfolio of office, industrial and retail sites is thought to be worth around £300 million, which leaves Lloyds Banking Group expecting a loss of £200 million if the assets are sold.

Newspapers have reported that the bank has already written off £200 million after the property group recorded a hefty pre-tax loss of £46.7 million for its 2008 results – as well as indicated liabilities of £288.7 million.