Controversial employment agency Transline has lost its contract with Asos as it tries to fend off insolvency.

The company, which provided temporary workers for the online fashion business’s Barnsley warehouse, filed court papers protecting it from creditors last week after being axed as a supplier of warehouse staff for Amazon.

Only a month ago, Nick Beighton, the chief executive of Asos, claimed conditions at the warehouse were “great” and there were no issues to resolve after concerns were raised about working practices.

Asos’s warehouse operator XPO Logistics confirmed it had terminated the agreement with Transline.

XPO said: “Following the filing by Transline of a notice of intention to appoint an administrator, we decided in conjunction with our customer to terminate the contract with Transline and appoint PMP Recruitment.” This would ensure continuous employment for workers and site operations at Barnsley, the company added.

The notice of intent gives Transline t10 days protection from creditors.

On Wednesday, the company said: “We have not ceased trading, and continue to have positive conversations with potential sources of investment. We are unable to comment at this time regarding specific commercial agreements. We will continue to keep all our employees and customers updated as the situation progresses.”

The employment agency has experienced a torrid 16 months since the publication of a Guardian investigation into working conditions at Sports Direct, which resulted in a deal where the retailer, Transline and a second agency, the Best Connection, agreed to make about £1m available in back pay to affected workers.

However, it emerged at a parliamentary select committee hearing in March that Transline had failed to honour part of that deal, leaving scores of workers who were paid less than the legal minimum wage without the back pay they were owed for their shifts.