Bank of Ireland could be facing heavy losses on loans to feed machinery firm Keenan Systems, which was put into receivership last week.

The Co Carlow-based company, which employs 222, has debts of nearly €14 million, including €7 million with Bank of Ireland.

Directors sought the protection of the courts last week after discussions with a potential investor collapsed.

The company, which makes diet feeders and mixer wagons, has been under financial pressure because of the downturn in commodity prices, which has put a squeeze on farmers’ incomes.

Receivers Kieran Wallace and Cormac O'Connor of KPMG are now negotiating a possible sale of the business to US animal nutrition group Alltech, with €40 million reported as the asking price.

While terms of the proposed deal have not been finalised, it is likely to involve a significant haircut for the company’s creditors.

The receivers said they were confident the Alltech talks would lead to a successful conclusion, which would preserve the 222 jobs.

The US firm is understood to see the potential for synergies across its own business from a tie-up with Keenan.