A telecommunications company which was launched two years ago has closed down with the loss of around 300 jobs at its headquarters in Borehamwood.

NextCall went into receivership on Friday after accepting it would not be able to pay millions of pounds owed to British Telecommunications (BT).

Most of the staff working at the head office in Elstree Way were from Borehamwood, and a further 100 sales jobs have been lost around the country.

The closure came after a long-running dispute between the company and BT, which involved NextCall seeking compensation from the telephone giant.

Helen Fergie, who was NextCall's tele-sales manager, said staff had been shocked to hear about the closure on Thursday night, and were sacked the next morning.

"It was a heart-breaking experience everybody put so much work in and had showed so much passion," she said.

The employees who lost their jobs at Hertsmere House were mainly from the customer services, accounts and information technology departments.

NextCall was set-up at the beginning of 1999 when BT was forced to sell phone line packages to other telecommunications companies to increase competition.

Initially some NextCall customers experienced problems in swapping to their new phone system, and the company claimed it would sue BT for £20million for loss of earnings.

BT this week accepted there had been early "teething problems" and said it had agreed to discuss compensation, but denied responsibility for the downfall of NextCall.

A BT spokesperson claimed the problems had been ironed out by December 1999 and that, by the end of last year, Nextcall had run up a bill of £18million with BT.

"In 1999 it was a completely new service for BT and we admit that there were some teething problems in the first few months," she said.

"If there had been a successful compensation claim the amount of money would have been much less than the amount NextCall owed BT."

Last year NextCall called on Hertsmere MP James Clappison to ask the Government telecommunications regulator, Oftel, to mediate between the two companies.

An Oftel spokesperson said: "Basically it was a commercial contractual dispute and we did not have any powers to intervene."

Mr Clappison said: "It is very sad so many people have been made redundant the closure is no reflection on the quality of the workforce."

Richard Harrigan, a NextCall shareholder, praised Mr Clappison for his efforts, but said £10million of shareholders' money had been lost with the closure of the company.