Capital was moved out of its Stratford site last summer by the LDA to make way for London's 2012 Olympic Park. The company was heavily compensated for the move with cash and a brand new state-of-the-art site at the Gemini Business Park on Beckton Waterfront – built by the LDA.

However, Capital went into administration on Thursday afternoon (26 June), with more than 100 staff not receiving wages for the month of June. Begbies Traynor was appointed as administrator and has had a presence on the site since Thursday.

A spokesman for the LDA said: "We are keeping track of the companies that we relocated and we have a team looking into how much involvement we can offer in terms of the administration.

"We have completed full and final settlement with Capital and they have received the compensation in full. We have nothing else to pay them. However, it is unclear as to why the business has closed. The LDA is making enquiries to establish the reason."

He also moved to quell speculation which has arisen around the industry that companies moved by the LDA have to remain in business on the chosen site in order to keep the compensation payment.

He explained: "This is a misconception. The compensation is given as a result of costs connected with the company moving to a new location. It is given under the statutory Compensation Code.

"It is completely up to them what they do with the compensation."

According to the spokesman, just over 50% of companies moved have completed full and final settlement and Capital is one of these.

Compensation is worked out in two batches, one for "disturbance costs" and one for "loss of profits". Although disturbance costs are generally easy to work out, some companies have chosen to wait until working out their loss of profits. Capital did not choose to wait.

The Spokesman added that he could not comment how much Capital had received in relation to the move, however earlier reports claim that it paid £12m for the new factory, as well as handing over £4.4m to Capital for "other costs associated with the move".

Capital's managing director, David Gill, has been uncontactable.