Gloucester City Council’s marketing company which organised some of the city’s biggest events, has ceased trading with immediate effect.
A review found Marketing Gloucester’s financial position was “untenable” and insolvency procedures are under way.
The BBC understands that seven members of staff at Marketing Gloucester have lost their jobs as a result.
The firm said the decision was made with “deep regret” but it had been “left with no other option”.
“We would like to extend our thanks and support to the staff for all their hard work over the years. We appreciate that this will be a difficult time for them and their families,” the spokesman added.
Marketing Gloucester was set-up and owned by Gloucester City Council, but it was not run by the council.
Financial issues surfaced last year and the council loaned the company £240,000 to get it through to the end of the financial year in March.
Its former chief executive Jason Smith was sacked in December after a review into the company’s governance and operations, and his interim replacement, Steve Brown, was appointed in January.
Marketing Gloucester was stripped of its right to organise major events such as the Tall Ships Festival and Gloucester Carnival by the council’s cabinet in January.
Gloucester City Council leader Richard Cook said: “We are saddened to hear of the decision the board have taken and we know this must have been a very difficult decision for them to make”.