Cornwall County Council has threatened Elior with legal action after the contract caterer pulled out of a school meals contract, just weeks before it was due to begin.
Elior, under its Avenance brand, was due to start feeding pupils at 171 primary and secondary schools across Cornwall from September, taking over from an in-house operation, but pulled out earlier this month.
The move has angered Cornwall Council, which described Elior's decision as "unilateral".
It has signed up Compass Group's Scolarest to handle the contract initially, although it has not been confirmed that the agreement will become permanent.
"The council's priority is to ensure that a quality school meals service will be in place from 1 September and it is confident that this will be achieved," Cornwall Council said in a statement.
"The council is currently exploring all legal remedies to address the damage caused by the actions of Avenance."
In response, an Elior spokeswoman said: "Following lengthy discussions with Cornwall Council we have taken the difficult decision not to proceed further with contract negotiations.
"These discussions are confidential and therefore it would be inappropriate to comment on the details, but we wish the council every success in securing the right partner for this important role"
The Cornwall school meals contract was previously run in-house.
By Chris Druce
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