Siren PR won a wide-ranging PR account with MFI in May this year and worked through its September management buy-out.
But the agency took the decision to cease working with MFI last week after encountering difficulty getting a clear message through to stakeholders.
Sarah Rathbone, associate director at Siren, said: 'We have fervently counselled the business to follow a clear line of communication with all its key audiences, and in a timely fashion, over recent days. However in some areas, this counsel was not taken and was compounded by the multiple involvement of administrators and investors.'
Rathbone added that the agency took the decision to quit the contract in order to 'safeguard and protect our own reputation'.
The agency served as MFI's press office, as well as carrying out CSR work, issues support and brand building for the retailer. Siren declined to comment on the level of fees outstanding following the firm's collapse.
FD was also recently brought on board by MFI for an ultimately unsuccessful restructuring brief.
Meanwhile, the administration of Woolworths' retail division has seen ZPR lose a recently won six-figure brief. 'We have lost an account, but we saw it coming,' said agency MD Zaria Pinchbeck. Because of Woolworths' widely known precarious financial position the account was being paid in advance, she said, and there would be no job losses at ZPR as a result.
The five-strong in-house comms team at Woolworths, led by Daniel Himsworth, remain in jobs at the moment, but all comms functions have switched to the press office of administrator Deloitte.
Tulchan Communications is serving as the retained financial PR agency of Woolworths Group PLC, which continues to trade.
Tulchan is assisting with the winding-up of the retail business and the sale of its 2 Entertain DVD venture with the BBC - its only real remaining asset.
Andrew Grant, Tulchan founder, said: 'We're going to carry on giving it the support it needs until it becomes clear what the future holds.'
One agency MD noted that the collapses were indicative of how agencies need to stay on top of chasing payments. 'You used to get paid in 60 to 90 days, now it's 90 to 120 days. Agencies will have to be vigilant about payments.'
TIME LINE: WOOLWORTHS AND MFI
29 November: Entrepreneur Theo Paphitis, Tesco and Asda reported among
potential bidders for Woolworths
26 November: Woolworths' retail division enters administration
26 November: Administrators called in by MFI
26 November: Shares suspended in Woolworths Group PLC
20 November: Woolworths in talks to sell stores for £1
28 September: Management buyout saves MFI
17 August: Woolworths rejects bid from Iceland