Clutha Mayor Bryan Cadogan is vowing to fight to save the Telford agricultural training facility in South Otago.
It was confirmed yesterday the Taratahi Agricultural Training Centre, which owns the Telford facility, had been placed in interim liquidation.
The move, which affected about 250 staff and 2850 students across Taratahi's campuses, was blamed on an inability to cut costs sufficiently as student numbers and funding declined.
Cadogan said staff and students at Telford faced a "tenuous" situation, but he was determined to fight for the future of the 54-year-old facility.
He said "all options are on the table".
"We certainly have hope that there's a way forward for Telford ... There is certainly an appetite amongst the community.
"It's always been more than just an institution to us. It's embedded in our history and it's a part of us, and it's certainly a part we'll fight for."
Cadogan's comments came after the High Court appointed David Ruscoe and Russell Moore, of accounting firm Grant Thornton, as interim liquidators.
Taratahi owned eight farm facilities across the country, including Telford, which it bought from Lincoln University last year.
Taratahi's acquisition was met with a wave of optimism, but its first year of operation had been "tough", Taratahi chief executive Arthur Graves said in August.
At the time, he said Telford was "behind on financial forecasts" and continuing to run a deficit, but only one year into a two-to-three year plan to return to sustainability.
On Monday, the Otago Daily Times asked Graves about rumours Telford was facing statutory management, but he denied that, saying: "Fortunately your information is incorrect".
Contacted yesterday, he declined to comment.
Taratahi board chairwoman Mavis Mullins also could not be contacted, but in a statement said the focus was on "our students, staff, animal welfare and our creditors and partners".
Grant Thornton said Taratahi's problems stemmed from the cost of educating each student, which exceeded funding despite government subsidies and cash flow from farming operations.
Taratahi had reported a $7.3million surplus in 2017, from revenue of $22.8million, of which $13.6million came from the Tertiary Education Commission. It also received $2million from Lincoln University when it took over Telford last year.
However, in 2014, Taratahi recognised an $8.7million liability from over-funding programmes, following a TEC review, which it was repaying at $40,000 per month.
In March, banker Westpac began reviewing its facility with the education provider.
Education Minister Chris Hipkins said yesterday Taratahi had repaid $3.5million of its $8.7million liability mostly by selling assets, which was not sustainable.
"What's clear is that the current model of vocational training for primary industry is broken," he said.
Political reaction from National MPs was swift, as Paula Bennett and Nathan Guy decried the "sad day for New Zealand agriculture", as did Clutha-Southland MP Hamish Walker.
Walker said Telford had a "fantastic" reputation, and he also hoped it could be salvaged "so it can continue to feed the agriculture industry, which is so badly in need of more people".
The interim liquidators said wages and salaries were "up to date" and funds were being received from livestock sales and Fonterra payments, to keep the organisation running over the Christmas break.
Cadogan urged the Government to fix the funding model, saying Telford had been a professionally run, viable operation until "enfeebled" in recent years.
"Taratahi's plight, the underlying issue is the structure and the setup - the funding model is broken.
"It's imperative that the needs in the economy, and the jewel in the Clutha district's crown, is protected."
- Additional reporting BusinessDesk