Administrators for bankrupt telecoms firm KPNQwest have said the company's European data network will close after last-ditch talks with the company's banks fell through.

KPNQwest administrator Ed Meijer said the company's trustees can no longer pay its suppliers, leaving them with no option but to shut the network down.

"Under these circumstances the liquidators can no longer support the plan to continue the operation of the network," he said in a statement.

Closing the network could cause major disruption to about 100,000 corporate clients who use it to access the web.

Since its users include many internet service providers, the shutdown could also slow internet traffic in Europe.

The timing of the network closure remains unclear.

Earlier on Friday, a Dutch court rejected an attempt by KPNQwest's administrators to force its creditor banks to release several million euros in fees collected from the company's clients.

The money is desperately needed to keep KPNQwest's network running.

Creditors circling

A utility group which supports the KPNQwest network had threatened to pull the plug on the service if the company does not settle its unpaid bills.

The future of KPNQWest's data network, Europe's largest, has been in doubt ever since the heavily-indebted company filed for bankruptcy late last month.

KPNQwest's collapse prompted its banks to tighten their grip on the company's assets, leaving its data network desperately short of cash.

A previous closure threat was averted earlier this month following a last-minute deal between the company's administrators and its network engineers, who had worked without pay for about a week.

KPNQwest's clients were urged to switch to alternative networks after the company went under.

Netherlands-based KPNQwest, a joint venture between Dutch telecoms giant KPN and US-based telephone firm Qwest, built up heavy debts building up its fibre optic cable network.

Demand for network capacity subsequently failed to meet expectations.