The men, who worked for Cape Darlington Ltd, formerly known as Darlington Insulation Company Limited, have been awarded more than £200,000 in compensation after developing asbestos-related diseases caused through working for the firm.

But they may never see a penny of compensation after Cape Darlington went into liquidation.

The company, originally founded in Darlington in 1948, carried out asbestos contract work across the UK.

When an employer goes into liquidation the company's insurers normally pay compensation claims. But one of Cape Darlington's insurers, Chester Street Insurance, are also in liquidation. Usually in these circumstances the government's Financial Services Compensation Scheme (FSCS) will step in.

However, in this case the FSCS will not pay because of a dispute between the parent company, Cape Plc, and William Baird Industrial Limited who sold Darlington Insulation to Cape Plc in 1992.

In the past Cape Darlington's asbestos victims received compensation from William Baird as part of the sale agreement with Cape Plc.

But William Baird say the £8.25 million limit on the amount of compensation they agreed to pay has been reached. FSCS refuse to pay the claims until the dispute is resolved between Cape Plc and William Baird.

Cape Plc had an operating profit of £14.6m in 2006.

personal injury claims lawyers Thompsons Solicitors, which has offices in Middlesbrough and Newcastle, represents four of the claimants.

However, thousands of people worked for Cape Darlington over the years and there are fears that more people will be affected in the future if this stalemate continues.

Head of Asbestos Policy

Head of asbestos policy at Thompsons Solicitors, Ian McFall, said: "These men are suffering from asbestos-related diseases caused by working for Cape Darlington. Some of them are dying. We have won compensation for them through the courts but they face no prospect of receiving it at present because of this deadlock.

"These companies and the FSCS should act now by paying the compensation without delay and sort out the bureaucratic red tape later."