Northern Ireland company Patton Group had a £2m contract to carry out repairs at the castle, which is undergoing work to turn it into a hotel and cultural centre.
But now the running of the firm has been handed to administrators and Patton owes its local partner, Neil Mackay & Co, the main contractor on the project, around £360,000.
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The Lews Castle Project Board met yesterday to discuss the future of work on Phase 1 of the Lews Castle Project.
Comhairle nan Eilean Siar is pressing the administrators as to whether they are able to continue the contract.
Administrators now have a formal deadline of Thursday, 21 November.
Alternative plans are being drawn up in the event that administrators will not continue the £2m contract.
Work at the Castle is between 60-65% complete, according to the Comhairle. It is now proceeding with evaluating tenders for the contract, with an award expected by early December.
The work is being funded by Comhairle nan Eilean Siar, Historic Scotland and the Heritage Lottery Fund.
Neil MacKay & Co. said the administration announcement has at least offered some certainty over the long-running concerns about the firm.
Half of the workforce involved in the work are now expecting to be made redundant, while some 20 staff are at risk of losing their jobs.
(IT/GK)
