Video report by ITV News Business Editor Joel Hills
Construction giant Carillion has said it has "no choice but to take steps to enter into compulsory liquidation with immediate effect" after talks failed to find another way to deal with the company's debts.
The government held talks in an attempt to avoid the company going into liquidation but the weekend negotiations proved unsuccessful.
The firm, which employs 20,000 people in the UK, has debts of £1.15 billion and a pension shortfall of over half a billion.
Due to the high number of government contracts Carillion has,the liquidation process will be handled by the Official Receiver.
Defence Secretary Gavin Williamson revealed that a Cobra meeting would be convened on Monday to discuss the situation.
Among its services, Carillion is involved in the construction of HS2, supply of the NHS and National Rail.
It helps manage 50 UK prisons, provides 32,000 school meals a day and maintains 50,000 homes for the Ministry of Defence.
Speaking on Monday, chairman Philip Green described the move as a "very sad day" for the company.
"Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period," he said.
"In recent days however we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision."
Recently appointed Minister for the Cabinet Office David Lidington said the Government's focus was to ensure wages were paid and public services carried out.
"The Government's job here is not to bail them out but to protect key public services and that's what we're doing," Mr Lidington told ITV News.
"Our job now is to make sure workers are continued to be paid, suppliers are continued to be paid and public services are delivered."
The Minister is also set to make a statement to the Commons later in the day.
Union Unite has called for an inquiry into the downfall of Carillion.
Shadow transport secretary Andy McDonald accused Tory counterpart Chris Grayling of a "negligent and carefree approach" to awarding contracts.
He said: "The Government should step in and take over Carillion's rail contracts to ensure rail renewal and enhancement work is brought in-house within Network Rail along with maintenance work."
Unions also called for reassurance over jobs, pay and pensions for thousands of workers.
Rail, Maritime and Transport union General Secretary Mick Cash said Carillion's plight was "disastrous news" for Britain's workforce and public services.
He said: "The blame for this lies squarely with the Government who are obsessed with out-sourcing key works to these high risk, private enterprises.
"RMT will be demanding urgent meetings with Network Rail and the train companies today with the objective of protecting our members jobs and pensions.
"The infrastructure and support works must be immediately taken in house with the workforce protected.
"Transport Secretary Chris Grayling and his Tory colleagues must be forced to take responsibility for this crisis which is wholly of their making."