CPP founder Hamish Ogston has pulled out of talks regarding a takeover of the troubled York employer.

The company, which employs about 900 people in the UK, mostly in York, has announced Mr Ogston has ceased all work in relation to his possible offer for CPP and his potential involvement in a refinancing of the group. He has also resigned as director of the company.

CPP said in a statement that the group has also been seeking alternative financing solutions including with certain business partners in parallel to discussions with Mr Ogston.

It said: “The group remains engaged in constructive discussions with its existing lenders and certain business partners with a view to putting in place a long-term funding plan for CPP.

The group has in place existing banking facilities which expire on September 30, 2013 and the board will make further announcements when appropriate.”

CPP has been in financial trouble since a 20-month investigation by the Financial Services Authority (FSA), now the Financial Conduct Authority (FCA), found it had been mis-selling its card and identity protection products.

The estimated cost of repaying customers to whom it had mis-sold products is expected to be £51.7 million, on top of a £10.5 million fine from the authority.

In March, it announced it had not managed to renew its financing arrangements, which included £40 million of debt.

The company sold its US business in April for £26.1 million, which bought it some more time with its existing lenders, but the current arrangement will expire at the end of September.

CPP recorded a pre-tax loss of £19.9 million for the year ended December 31, 2012, down from profits of £11.9 million in 2011, and followed the announcement with a restructuring involving the loss of 120 jobs, including its chief executive, finance director and UK managing director.

Mr Ogston had been considering making an offer for the insurance business, which he said was dependent on completing due diligence on the group, securing new credit arrangements with its lenders for a three-year term, and ring-fencing certain parts of the group.

City of York Council leader James Alexander said: “CPP is a valued and major employer in York, and the council is committed to working with the company through its current difficulties. I met with Hamish just last week to discuss his plans and the support we can offer CPP as the council and in partnership with other support organisations across York. We remain hopeful of a satisfactory resolution for all and stand ready to assist in any way we can.”

Hugh Bayley, York Central MP, said: “I shall continue to support the company to get through this difficult patch.”