By Dan Satherley and James Murray with NZPA / RadioLIVE
South Canterbury Finance is to be placed in receivership.
The company told the NZX this morning it had been unable to complete a deal to restructure the company.
However, Finance Minister Bill English is expected to announce a complicated government deal with SCF in an announcement at lunchtime today.
It is possible the Government may take on various parts of the ailing company, including guaranteeing some of its bad debts in an attempt to reduce the payout it would have to make as part of the Retail Deposit Guarantee Scheme, which SCF is signed up to.
The troubled finance company currently owes more than 20,000 investors around $1.7 billion.
Its statement read: "South Canterbury Finance Limited announced today that it has been unable to complete a recapitalisation and restructure.
"As a result, the Company would have been unable to certify to Trustees Executors Limited, in accordance with the terms of its debenture trust deed with Trustees Executors Limited, that it was compliant with various financial covenants under the debenture trust deed for the financial year ended 30 June 2010.
"Accordingly, South Canterbury Finance Limited has requested Trustees Executors Limited to appoint a receiver in respect of the whole of its undertaking and assets, and Trustees Executors Limited has done so.
"A further announcement will be made by the Company in due course."
The company expects to make a further announcement later today.
The company warned yesterday there was no certainty that recapitalisation and restructuring proposals would be successful.
Today, Mr Maier told Radio New Zealand the "long running saga" of sorting out the problems of SCF was "not over yet".
"We've been working on a resolution to South Canterbury's problems for nine months. It's been a long process, it certainly will not be over today," Mr Maier said.
Yesterday Prime Minister John Key was focused on assurances the company's 20,000 investors will get their money back but wouldn't comment on persistent speculation that ministers have found a way to avoid SCF's collapse that doesn't involve a massive injection of taxpayer money.
His announcement that Finance Minister Bill English had delayed a visit to Asia so he could handle today's developments was taken as a sign the Government could still have a card to play.
Mr Key said "a number of parties" had been in contact with the Government offering rescue packages and the Government had a carefully constructed plan to deal with the crisis.
He wouldn't disclose what it was but said there were three objectives - making sure depositors were protected, minimising cost to the taxpayer and ensuring any economic disruption was kept to a minimum.
Speculation last night centred on the possibility that the Government could guarantee the company's bad debts, reported to be roughly on the same scale as the payout that would have to be made to investors if SCF collapsed.
That would allow it to continue trading, but Mr Key's comment that the Government could not "in all conscience" put taxpayers at risk seemed to preclude that.
The company, one of New Zealand's biggest non-bank institutions, is part of the Government's Retail Deposit Guarantee Scheme which ensures investors will get their money back, with interest.
RadioLIVE / 3 News / NZPA
AUDIO: RadioLIVE's Marcus Lush
talks with Bernard Hickey about South Canterbury Finance and the Serious
Fraud Office investigation into Allan Hubbard's private finance companies.