Global Counsel, the advisory firm founded by Lord Mandelson, fell into administration with debts to HM Revenue and Customs (HMRC) approaching £646,000, according to creditor proposals.
The London-based consultancy entered insolvency in February following a rapid loss of major clients after fresh disclosures concerning the former cabinet minister’s links to convicted paedophile financier Jeffrey Epstein.
Barclays, Tesco and Vodafone were among the companies that ended their contracts with the firm.
Will Wright, UK chief executive at Interpath Advisory, said: "While Global Counsel had grown over the past 15 years to become one of the UK's leading public affairs consultancies, the rapid and sudden loss of clients over recent weeks has had a monumental impact on the business."
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Lord Mandelson disposed of his remaining stake in the business in stages after Sir Keir Starmer dismissed him from his role as Britain’s ambassador to the United States last autumn.
The Financial Times reported that the former Labour peer secured more than £1.5million from those share sales.
Rebecca Park, who briefly served as chief executive, acquired the majority of his holdings.
Following the company’s collapse into administration, those shares became worthless.
Global Counsel collapsed owing HMRC £646000
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The firm, which was co-founded in 2010, has now ceased trading, leaving creditors including Bloomberg and the Press Association among those owed money.
The collapse resulted in most of Global Counsel’s approximately 80 UK employees being made redundant.
Steve Absolom, managing director at Interpath Advisory, said: "Our immediate focus is on supporting the talented and loyal UK team of Global Counsel employees who, having collectively built a market-leading business, now sadly find themselves having to be made redundant."
Former staff owed holiday pay, wages and pension contributions are expected to be paid in full as preferential creditors, according to the administrator’s proposals.
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The PM relieved him of his duties as Britain’s ambassador to the US last autumn
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HMRC, classified as a secondary preferential creditor, is expected to receive a dividend, although the amount and timing remain uncertain.
The tax authority has not yet submitted a final proof of debt, which was reported by Sky News.
Lord Mandelson was arrested in February on suspicion of misconduct in public office, with Metropolitan Police officers searching properties in London and Wiltshire.
The arrest followed the emergence of emails appearing to suggest he may have shared market-sensitive information with Epstein in 2009 while serving as business secretary under Gordon Brown.
However, Mr Mandelson has not been charged, and his lawyers say he is cooperating fully with the investigation, insisting his priority is to clear his name.
Lord Mandelson established Global Counsel alongside Benjamin Wegg-Prosser after Labour’s general election defeat in 2010.
Mr Wegg-Prosser, who previously worked as a political adviser and director of strategic communications under Tony Blair, left the firm earlier this year after it cut ties with Lord Mandelson.
The company had stated that the peer no longer held any role or influence within the business.