The Serious Fraud Office is investigating the failure of clothing and textile manufacturer Lane Walker Rudkin.
SFO director Grant Liddell said his office had launched an investigation following a complaint from the LWR group's receivers.
The century-old Christchurch company collapsed in April owing a total of $121 million.
Over $111
million of that is owed to Westpac.
Liddell said the receivers claimed LWR had misrepresented its financial strength to Westpac in order to borrow from the bank, and if Westpac had known the true position it would not have lent so much.
In his first report in July for the parent entity Lane Walker Rudkin Industries, joint receiver Stephen Tubbs of BDO strongly criticised the company's management.
"The standard of financial reporting and corporate governance have, in our view, been inadequate for a company of this size and have been significant factors in the company's underperformance and entry into receivership," he said.
The reports for the group showed only one of the eight subsidiaries, Southern Alps Socks, had a positive book value. The rest had more liabilities than assets.
Around 230 people have lost their jobs as a result of the collapse and there have not been enough funds to pay them their full entitlements.
LWR was bought by Ken and Patricia Anderson, owners of the Stirling Sports retail chain, from New Zealand-born American David Teece and his partners in 2001.
At that stage it still owned the Canterbury sportswear label - the company that once employed Prime Minister John Key - but the Teece group retained that business.
Before that the company had been owned by Brierley Investments.
Patricia Anderson appeared to officially end her association with the business in 2006 and the couple are understood to have split.
The Andersons bought Auckland-based textile and homewares business, Pod, in 2007. Pod has three divisions which employ more than 200 staff - a merino business, and fashion distribution and curtain-making divisions - and is not in receivership. The receivers have stressed that Pod's managers are still running the business and it appears to be profitable.
Grant Liddell said he could not predict how long the SFO investigation would take but it was likely to be a number of months. "Our work is already underway, however, and information has already been received and is being analysed."
