Gunns Ltd has gone into receivership after the Tasmanian timber company failed to secure funds to keep the company going, putting more than 600 jobs at risk.
Mark Korda and Bryan Webster of KordaMentha were appointed receivers and will manage the group's affairs, including continuing the business as an ongoing concern to preserve the value of the assets while a sale process is conducted.
Earlier on Tuesday, Gunns went in to voluntary administration and said the global economic downturn had reduced demand and pushed down prices for export woodchips.
The company had been seeking financial support to fund a restructure or capital raising, but its lenders were unable to provide any more money.
Mr Korda said the receivers would undertake a review of harvesting operations, plantation maintenance and lease obligations to determine a restructuring strategy.
They will also explore all other opportunities to maximise value to stakeholders, including a review of the planned pulp mill at Bell Bay in northern Tasmania.
Gunns started in Launceston in 1875 as a family-owned saw milling and building company and currently employs about 645 workers in Tasmania, Victoria, South Australia and Western Australia.
In recent years it had been hard hit by massive writedowns on the value of its forestry assets and had been seeking to raise about $400 million to cut debt and support the development of the Bell Bay pulp mill.
Gunns, whose shares have been suspended from trade since March, made a $904 million net loss in 2011/12.
It had been seeking financial support to fund a restructure or capital raising, but its lenders were unable to provide any more money.
Morningstar analyst Peter Warnes said the poor state of the housing market had resulted in little demand for timber and pulp prices had fallen since the global financial crisis.
Mr Warnes said Gunns had suffered partly because of the hard line taken by environmentalists in Tasmania - and managing director John Gay had not helped by reacting aggressively.
"A lot of people have to take the blame for this potential failure," he said.
The Construction, Forestry, Mining and Energy Union (CFMEU) said it would fight for the entitlements of Gunns workers who lose their jobs.
"Some of these employees have been with the company for decades, sticking with Gunns through thick and thin," CFMEU national secretary Michael O'Connor said.
Green Leader Christine Milne said the announcement spelled the end for the proposed $2.3 billion Bell Bay mill in Tasmania.
"Gunns placed all their eggs in one basket, with this high risk, high cost pulp mill at the bottom of the world, and neither the community or other investors supporting it, especially with the high Australian dollar," she said.
Keep reading - next article