Schmidlin, the Swiss cladding company that went bankrupt last week, could be bought out by a Middle Eastern investor.

The news emerged as the firm, which is behind high-profile London projects such as Swiss Re, Heathrow Terminal 5 and More London on the South Bank, was locked in talks over restarting production at its factory in Aesch, Switzerland.

Production stopped after Schmidlin Facade Technology declared itself bankrupt on Wednesday 22 February, citing a loss of £5.7m on two projects along with heavy debts.

Mike Hollis, Schmidlin UK managing director, speaking from Switzerland this week, said: "A very small amount of production has restarted in the factory and we are now in talks about getting more people back in there."

He said that a number of parties had shown interest in the firm. "One of the potential investors in the group, which includes Schmidlin UK and its Swiss parent company, is a Middle Eastern investor. I can't go into more detail than that at the moment."

Sources close to the firm, however, said that a developer might be behind the Middle Eastern bid, and that a buyout by the Swiss management team was also a possibility.

Schmidlin employs 750 staff throughout the world. Its bankruptcy has put jobs at risk across Schmidlin's operations in Aesch, London, Paris, Berlin and Würzburg in Germany, Singapore and Shanghai.

Its Abu Dhabi and Dubai operations are not affected by the bankruptcy. They have expressed interest in buying the manufacturing operations in Switzerland.

Schmidlin blames high costs, but what do you expect, manufacturing in Switzerland?

Developer source

The London arm of the firm, Schmidlin UK, is still trading and has workers on site at projects.

British clients and contractors are waiting to find out if Schmidlin will be able to complete work on a number of projects.

A spokesperson for Bovis Lend Lease, which working with Schmidlin on Aldermanbury Square for Scottish Widows, said: "The situation is still unclear, but we should know more by the end of the week. We are reviewing our options."

Richard Elliott, construction director of British Land, said: "We are monitoring the situation, as a number of others are. I can't say more than that."

Spokespeople at Heathrow T5 and More London said work on the two projects was mostly complete. Multiplex, which is using Schmidlin at White City, west London, declined to comment.

Developers have questioned Schmidlin's decision to keep its manufacturing base in Switzerland, where high costs have added to financial difficulties. One said: "Schmidlin says high costs are partly to blame, but if you're manufacturing in Switzerland, what do you expect? It should have moved manufacturing to eastern Europe or China years ago."