TROUBLED support services group Jarvis is still the preferred partner for a contract to build special schools, Kirklees Council said.
Council bosses spoke out after Fife Council in Scotland cancelled a £175m schools deal with Jarvis.
The move came a month after the firm announced annual losses of £246.7m and said it had secured the support of its lenders for another eight months.
Jarvis has been chosen to build a new Newsome Special School, plus three other special schools in Kirklees, in a £25m Private Finance Initiative scheme.
Site works at Newsome ground to a halt last month after Jarvis's troubles were revealed.
The council said then that there could be a hold-up of about a month.
A Kirklees spokesman said: "The signing of the contract has been delayed because of the current position.
"Council officers have had, and will continue to have, detailed discussions with Jarvis, their bankers and with the Department for Education and Skills and also with other councils in a similar position."
Jarvis shares fell another 4% as Fife Council said its Expanding Horizons project would go back out to tender.
The council refused to comment on why the deal collapsed.
Jarvis said the outcome was `disappointing', adding that it had been competitively chosen for the work.
It said: "However, it became clear that although good, positive, working relationships have been maintained throughout we could not finally reach agreement on remaining key issues."