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The adminstrator for collapsed contractor Christiani & Nielsen is considering legal action against a Welsh council, which it claims contributed to the firm's downfall.

KPMG joint administrator Roger Oldfield confirmed that Christiani & Nielsen had been in dispute with Torfaen council over an alleged £7m.

Oldfield was called into the Leamington contractor last Friday. He layed off all but 22 of the 250 staff and closed all its construction sites, after Christiani's parent group in Thailand decided to pull out.

Oldfield said the Torfaen dispute, over the £24m Pontymoile road, was one of two contracts where the firm was waiting to be paid.

Christiani, along with a Greek joint venture partner, is also allegedly owed in the region of £15m for the Preveza tunnel in Greece, a project started in the mid 1990s.

Oldfield said: "This Welsh contract has been a contributory part of the demise of Christiani. I shall be going for the council in a big way. If we cannot settle this in a sensible commercial way then we will seek other means. We have no goodwill to protect."

Costs for the Welsh road project, opened last year, spiralled from an original £9.5m to £24m, he said.

In a statement, Torfaen council said: "There is a substantial difference between Christiani & Nielsen's claims, which were significantly above the contract price, and what the council is prepared to agree."

The administrators have been holding talks with five contractors keen on taking on Christiani contracts, but it is not believed that the business can be sold in its entirety.

I shall be going for the council in a big way. We have no goodwill to protect

Roger Oldfield, KPMG

Oldfield emphasised that the firm had also collapsed because it had overstretched itself.

High-profile projects the firm took on included a new stand at Aston Villa football club, a showpiece bridge at the Lowry arts complex and the £100m Millennium Point in Birmingham, in a joint venture with Galliford.

Local contractors and QSs were shocked when they heard of Christiani's demise.

One contractor said: "I was astounded. When I heard it I couldn't quite believe it."

One local QS said the firm had struggled with the move from civil engineering to straight construction.

The QS said: "The feeling in the industry is that it tried to go too far too quickly.

"Construction is a different animal – it picked up four to five main jobs and was not capable of staffing them or managing them."

The firm was also hit by the departure of UK managing director Alan Crane in June.