My After-School Headquarters (Mash) provides programmes for primary school pupils in the South Island, including Dunedin.
But Wakari School principal Stacey Gribben said teachers had to fill in for Mash after the company failed to provide services.
"We’ve severed our ties with Mash.
"There has been a failure to communicate with us, and a failure to pay for venue hire.
"After-school care is now an important part of what schools provide, so for this to happen is stressful for both parents and teachers alike," she said.
The school would continue to have teachers assist with after-school activity arrangements until a permanent solution was found, she said.
"We’re doing the best we can given the situation," she said.
Green Island School principal Aaron Warrington said the school had decided to terminate its contract with the business after experiencing "a whole range of issues and problems".
"I wouldn’t send my own children to it.
"I really feel for both the parents and the Mash staff, both of whom have had to carry the can."
There had been "all sorts of rumours" floating around the company, which was a cause of distraction and stress for staff and parents alike, he said.
"There’s clearly something not quite right with the company."
Meanwhile, a worker for the embattled after-school care provider is still waiting to be paid nearly a month after being employed.
Cecilia Miras, who is based in Christchurch, said since being employed by the company more than three weeks ago, she was yet to receive payment.
"I have been trying to get in touch with Mash managing director Craig Fortune, but I haven’t had any luck.
"I am not fully aware about their business troubles, but now I can’t pay my bills."
She had a long-term disability, but managed to work 10 hours a week and drove her mobility scooter to work.
"I love my job and give my heart for the Mash children."
Over the past month, the ODT has received complaints from schools and staff about the way Mash runs its operations.
Government agency Te Kāhui Kāhu, which provides accreditation to Mash, has confirmed it is "responding to three complaints about not delivering programmes, parents being unable to access refunds for cancelled programmes and adult-child ratios".
Repeated attempts to reach Mr Fortune for comment have been unsuccessful.
A spokesman for the Ministry of Social Development said the investigation was ongoing.
