Ecofibre's administrator has secured short-term financing to keep the company operational and stave off liquidation.
Financial consultancy KordaMentha told shareholders that without the funding it would have "no option" but to recommend Ecofibre be wound up.
In that scenario, creditors would be unlikely to see any return on what they are owed, the administrator cautioned.
A first meeting of creditors was held on Wednesday.
Ecofibre entered voluntary administration on May 2, with KordaMentha appointed to oversee its financial affairs.
Documents lodged with the Australian Securities and Investments Commission (ASIC) show the company owes US$13.2 million (A$20.5m) to creditors, with the vast majority owed to related parties.
Among those creditors are Barry Lambert, whose funds established the Lambert Initiative (US$3.49m), and a company called James 1916 (US$6.5m).
A total of US$5.2m is owed to Ecofibre, all intercompany debts, including US$4.9m owed by Ecofibre USA.
Under the financing arrangement with lender Van Diemans Land Finance, Ecofibre will have access to A$4.1 million over six weeks from the date of the first drawdown.
Administrator Scott Langdon said the funding was necessary to "support operations" of the company and to speed up a sale process.
"We consider it to be in the best interests of creditors to have entered into this funding agreement," he said in an update. "Based on our review of the company's books and records and our discussions with management, we are satisfied that if the company did not obtain this short-term funding, then it will not be able to continue operating and we will have no option but to recommend that the company be wound up.
"If the company is wound up, then we expect that the value of the assets will be substantially reduced and correspondingly there will be no or minimal return to creditors."
The company had been managing a strained financial position for several quarters, with management concluding it had little choice but to enter administration after filing its Q3 cash flow report with the Australian Securities Exchange (ASX).
Shortly before KordaMentha was appointed, Ecofibre disclosed to the ASX that it would need to divest one or more assets in order to continue trading and meet its obligations.
Ecofibre's portfolio of businesses includes Ananda Health, Ecofibre Genetics and Ecofibre Advanced Technologies.
