Crailar Technologies, developer of the sustainably grown Crailar Flax based fibre for clothing, is seeking an investor or to sell its assets as it restructures its business in an effort to avoid bankruptcy.

The Canadian based firm, which has been working for the past decade on the research, development and commercial sales of environmentally friendly fibres and textile production processes based on hemp and flax, filed for creditor protection under the Companies' Creditors Arrangement Act (CCAA) at the end of November.

The court order protects the company from all actions and creditors until 31 January, and also authorises the sale of the company or its assets to maintain its activity. The assets that have been put up for sale are the trademarks, patents and all intellectual property, inventory and equipment for fibre production at its plant in South Carolina, along with fibre supply agreements.

Hanesbrands, Cone Denim, PVH Corporation, Levi Strauss and Target are among companies who have trialled the use of Crailar Flax in their products.

However, despite investing upwards of $18m on its flax fibre processing plant in Pamplico, South Carolina, the company has encountered numerous problems bringing production to scale.

The Crailar patented process effectively cleans and polishes raw bast fibre, such as flax, hemp and jute bast fibres, into a fibre said to be "substantially equivalent" to ginned cotton.

In September, the company said it would switch to licensing model for its flax and hemp processing technology, a move that would enable it to expand production capacity "without significant infrastructure and capital resources."

As part of the transition, it re-sold its European fibre production facility in Belgium to the plant's previous owner, and said it would also reduce ongoing annual costs and overhead by $1.6m.