Australian miner Arrium on Thursday was placed in voluntary administration after the collapse of a $927-million recapitalization plan amid a bleak outlook for iron ore and steel, putting the jobs of its 7,000 workers at risk.
The move that effectively hands over Arrium's control for restructuring also sends an alarming signal to other companies wrestling with high debt as creditors sour on resources firms.
A weak commodities market has already hammered Arrium's shares, which have cratered 62 percent so far this year.
The miner said it would continue to do business as usual until completion of the administrators' review covering its various iron ore mining and steel businesses.
Arrium has been in discussions with banks and noteholders following a rejection of a recapitalization plan with a unit of private equity giant Blackstone Group in February.
"These discussions have now ceased," Arrium said.
"After considering the available alternatives, in the current circumstances it has become clear to the board of Arrium that it has, unfortunately, been left with no option other than to place the relevant companies into voluntary administration in order to protect the interests of stakeholders," it said.
The company has appointed corporate administrators Grant Thornton, with executive control to be transferred immediately.
"Our focus will be to stabilize current trading, maintain business as usual across the group's affected operations, and identify ways to restore the performance of key business units," Paul Billingham, managing partner of Grant Thornton's financial advisory business, said in a statement.
Arrium is one of a legion of smaller-sized resources companies in Australia that used debt to buy second-tier iron ore mines to feed Chinese industrial expansion.
But they found themselves far out-produced by sector giants such as Rio Tinto and BHP Billiton. Most of these smaller firms were left in the red as Chinese industrial growth slowed and iron ore and steel prices contracted.