- Leagas Shafron Davis has caved in under the weight of its financial problems and gone into receivership.
The agency confirmed the move late on Wednesday morning after talks with its bankers failed to result in a financial restructuring package.
It comes three weeks after the agency fired 14 people -- almost half its staff -- in an attempt to stave off the crisis.
The 11 year old shop, ranked 52nd in the UK, had been fighting for survival since the loss of its Royal and Sun Alliance business last year, compounded by the expense of buying itself out of the Wilkens European network.
In the last few days Ron Leagas, its chairman, is understood to have had talks with other agencies about possible deals without success.
The receivership poses and immediate question over the future of more than £4 million worth of Central Office of Information business, including special constable recruitment and the Inland Revenue, for which the agency created Hector the tax inspector.
Peter Buchanan, the COI's director of advertising, said: "I can't comment on what will happen to the business at the moment. It's too early to say."
The agency's other major accounts include the £2.8 million Zanussi dishwasher and fridge freezer business, Sanyo digital cameras and the stores group Heals. Last year it was appointed to relaunch Joe Bloggs jeans.