Hamilton firm Alpha Aviation has gone into liquidation leaving a good proportion of its 70 staff out of work and owed a week's wages.
The company called a meeting of staff yesterday to tell them the grim news.
Australian listed parent company, Inventis, called for a suspension of trading in its shares as it made the announcement.
Avionics technician Geoff Sanderson told the Waikato Times the company informed them it was going into liquidation and couldn't pay staff. He was due to be paid yesterday but had not received any money.
Workers were told to collect their tools and go home.
Mr Sanderson moved from Air New Zealand to Alpha in November and his son Tim, 18, had also been working for a short time as a trainee process worker.
He said the company had been still hiring until recently, with one moving from the UK to take up work only two weeks ago.
He had seen no sign the company was in trouble. "It was unexpected. The work, if anything, was ramping up."
Just 18 months ago, then chairman Graeme Edwards said Alpha was "exceeding our wildest expectations" with regards to orders for its two-seater aircraft.
It was expected Alpha would pump $75 million into the local economy over 10 years, excluding aircraft revenue.
Alpha is a key part of a cluster of aviation companies in Hamilton which also includes Pacific Aerospace and CTC.
Inventis appointed a liquidator after costs spiralled out of control, and a three-month search had failed to find a buyer of the business.
Alpha was set up in 2004 when it acquired the world rights to the French-designed Robin R2160 and R2120 light aircraft, renamed the Alpha 2000 series.
Inventis, then Gregory Australia, bought Alpha in August 2006 for A$11 million ($12.63 million) .
Alpha was aiming to sell into the $5 billion market of training aircraft. The sale to Inventis was to have given Alpha access to capital to rapidly expand production to 100 aircraft a year.
About 20 planes had been delivered to New Zealand and Australian customers, mostly flying schools.
The Times reported that the liquidator was likely to try and sell the business as a going concern to another aircraft manufacturer and reopen the factory. Four aircraft were on the production line and some staff might be kept on to complete those.
Inventis said it was not prepared for its profitable divisions to support Alpha, whose internal costs had spiralled up.
Inventis said more details about the company's financial position would be made available tomorrow.
Investors in Alpha included Tony Noun, a director of both companies, Richard Izard, Mr Edwards, Barry Colman, and John Birch.