A dairy banned from selling its curd cheese in Europe by the European Union is to close on Friday.
The row centred on methods of making curd cheese
John Wright, Director of Bowland Dairy Products, of Nelson, Lancs, said the firm was caught in a row between the EU and the UK Food Standards Agency (FSA).
And the UK government is set to face legal action from the European Commission following the European ban on the dairy's curd cheese.
The EU banned the firm's curd, accusing it of breaching EU food safety laws.
Commission investigators said the dairy used mouldy cheese and "floor waste" to make its curd.
A company spokesman said it no longer used "floor waste" - cheese which falls off factory conveyor belts into stainless steel vats - after consultation with the FSA.
The commission said there was evidence raw milk containing antibiotic residues or contaminated with substances such as detergents and dyes was being used to make curd cheese with out-of-date milk collected from shops.
But Bowland claimed it was the "unfortunate victim" of a dispute between the commission, the UK Government and the UK Food Standards Agency over EU requirements for antibiotic testing of milk.
Mr Wright said: "They squabble and 26 people lose their livelihoods. We have been closed for no good reason."
Bowland won one legal case against Brussels over the testing of milk containing residues of antibiotics with the commission ordering the EU to withdraw a Rapid Alert Notice stating the produce was unsafe.
But on 6 October the commission announced it was banning Bowland's curd cheese.
It also said that commission inspectors will spend five days next month on random checks in England, inspecting seven to 10 dairies.
EU commissioners are expected to approve sending a formal warning letter to the UK Government for its "lack of action on this issue."