Renewcell, which is the maker of recycled fibre circulose, said its decision follows advanced negotiations with its two largest shareholders Swedish fashion brand H&M and biotech company Girindus, as well as its existing lenders, potential new investors, and other stakeholders.

However, it added that despite these discussions, no concrete solution was found to provide the company with the sufficient financing to be able to complete the strategic review it announced in November with a satisfactory result.

Chairman of the board of directors at Renewcell, Michael Berg, stated that even though the company was a part of "intense" dialogues with both current main owners, new investors, banks and other stakeholders, these discussions were "unsuccessful".

He said: "As we have a strong belief in the company’s long-term potential, we have together with our advisors spent very substantial time and efforts into trying to secure the necessary liquidity, capital and ownership structure for the company to secure its future."

He added: "This is a sad day for the environment, our employees, our shareholders, and our other stakeholders, and it is a testament to the lack of leadership and necessary pace of change in the fashion industry."

The Swedish company did manage to secure short-term funding of SEK100m ($9.83m) in December, however it aimed to secure long-term financing by the first quarter of 2024.

Last month the company also announced plans to slash its workforce by 25% in a bid to create savings of SEK35m ($3.4m) per year.

The company's strategic review was announced in November in response to challenges it faced in terms of sales volume and market dynamic. Renewcell said at the time its decision to conduct a strategic review followed lower-than-expected sales volumes to fibre producers in its third quarter as well as subdued sales in October.