The New Zealand and Australia arm of the international yoga festival Wanderlust has gone into liquidation owing an estimated $1.6 million.
The annual festival attracts thousands of yogis and is due to go ahead in Taupō in March.
In the liquidators first report released yesterday, it said the shareholders chose to liquidate after being unable to recover from debts they incurred in 2016.
It said the company, Yoga Events Australia New Zealand Limited (YEANZ), could not secure enough sponsorship deals, and had too many paid staff on the books.
They attempted a last-minute restructure, but it was too late.
The company has around 130 creditors who have all been notified but at this stage it is unclear exactly how much is owed and if the company will have enough assets to cover it.
Wanderlust chief executive Sean Hoess based in the United States said they were trying to find a new event partner to ensure the New Zealand and Australian festivals could still go ahead.
"I am very confident we can make Taupō happen, but cannot confirm 100 percent at this time.
"What I can confirm is that anyone who has purchased a ticket for Wanderlust Great Lake Taupō will either receive the incredible event that was promised - and that is definitely the most likely outcome - or they will receive a full refund of their ticket purchase directly from Wanderlust USA," he said.
Another spokesperson for Wanderlust's head office Jessica Roozeboom said they had only been made aware of YEANZ Limited's financial difficulties in the last week.
"The news of their insolvency is very distressing for us, both because we are YEANZ's biggest creditor, and more importantly, because we have worked incredibly hard to develop Wanderlust as a purpose-driven brand with integrity."
Ms Roozeboom said while Wanderlust Festival was not legally responsible for debts incurred by YEANZ, they would step in.
"YEANZ is an independent business entity, and it alone is legally responsible for any debts or obligations incurred by it. That said, we care deeply about Wanderlust's reputation and therefore recognize a moral obligation to attempt to mitigate the impact of YEANZ's unfulfilled obligations."