Finance Minister Bill English has admitted the Government could have intervened in Solid Energy's situation earlier.
The state-owned coal company has been put into voluntary administration with a view to keeping it trading for the next two and a half years.
During that time it will determine which assets are profitable and can be sold.
Opposition parties have blamed the Government for the company's failure.
Mr English said its demise was due to a combination of excessive ambition, high debt and dropping coal prices.
However he acknowledged that as a shareholder the Government had to take some responsibility and said it could have shut down Solid Energy earlier.
Yesterday, Labour's state owned enterprises spokesperson, Clayton Cosgrove, said Solid Energy was once an award winning company but the Government had run it into the ground.
Mr Cosgrove said the people who were now paying the price were the "hundreds of staff on the coal-face literally, who kept the show on the road - the West Coast miners".
Mr Cosgrove said the Government should have ensured Solid Energy had a plan B.
The Greens energy spokesperson Gareth Hughes said the Government had overplayed its hand.
"What we've seen is ministers who were over-confident about Solid Energy, over-valued it, over-geared the debt ratio, took out too many dividends - what we saw unfortunately was a state owned enterprise taken to the brink," he said.
Prime Minister John Key yesterday said the Government had done all it could to try to keep Solid Energy afloat but that falling international coal prices meant it simply was not sustainable.