Liquidation is the Government's least preferred option for debt-ridden state-owned enterprise Solid Energy, Prime Minister John Key says.
The coal mining company has told staff three options are on the table - a sell-down, an arrangement that would allow it to trade on, or liquidation.
Mr Key said, while the Government did not want to see the company liquidated, he could not rule out that out as a possibility.
The Prime Minister said Solid Energy was currently in sensitive negotiations with its banks and the next step was up to them.
"There are other options which would find more favour with the Government but of course the call is one which is made by the bankers, because essentially it's their debt."