The axe has fallen on $14.9 million Flat Rock Forests Trust, but the trees are still standing.
Instead its bankers have put the trust, which has about 1100 unitholders, into receivership.
The trust, which is geared, has for some time had trouble servicing its debt levels as the value of its assets have fallen.
While log prices have been trending down for sometime now the situation has been exacerbated by the Asian crisis.
More than a year ago the trust breached its 35 per cent borrowing limit and a unitholder meeting was held in February 1997 to sanction a stay of execution until December 31.
As at March 31, its debt of $6.9 million amounted to 46.3 per cent of the trust's total assets of $14.9 million.
The situation has deteriorated since then.
By the end of last year the manager, New Zealand Development Trust Fund, had failed to sell any of the forest assets and the fund's financial position worsened.
Consequently the axe came down last week.
The trust's bankers called in receivers Jane Muir and John Cregten to manage an asset realisation programme.
Muir says the 12 forests, which are generally small woodlots scattered about the North Island, will probably be put up for tender.
She says the trust is a casualty of having debt when asset values are falling and it's not a problem solely related to forestry.
Any asset that is financed by debt, has poor liquidity, and goes through cycles is open to the same problems.
Flat Rocks was established in 1989, three years later the manager released a prospectus for the issue of 3.8 million units. A further prospectus was issued in 1993.
It was set up as an income trust, where regular distributions were to be made to unitholders from on-going harvest operations.
The axe has fallen on $14.9 million Flat Rock Forests Trust, but the trees are still standing.