Earth Resources Regulation has gone to the Federal Court of Australia to stop one company locking in a deed of company arrangement for Kralcopic, the Bendigo group that collapsed into voluntary administration last month.

GBM Gold was trying to convince creditors it should take control of its former subsidiary under a deal that could have included assets at old mining sites including Kangaroo Flat and Woodvale.

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But the regulator opposed that bid, saying in a public statement that GBM Gold's bid neglected future rehabilitation of Bendigo's mine sites.

Kralcopic had set aside bond money for environmental rehabilitation before it had gone into voluntary administration but the regulator was previously working with company administrators to claim more.

It also said GBM Gold's sole director is not ordinarily a resident of Australia. Proprietary companies must have at least one director who ordinarily is, according to the Commonwealth corporations act.

The Federal Court has appointed two liquidators from KPMG to oversee the liquidation.

The decision will likely bring Bendigo's 170 year mining journey to an end.

It will allow the mining regulator to begin rehabilitation works at a number of Bendigo sites including Kangaroo Flat's "Swan Decline" tunnel which connects to the city's goldfields surfaces.

The decision has angered one mining consortium that was previously working on a potential deed of company arrangement of its own.

A spokesperson said his group wants to meet with the mining regulator.

"The state government has always had one agenda to kill gold mining at Kangaroo Flat despite what could still be a huge resource still underground," the spokesperson said.

"Why would you do that and shut the gate, if there are hundreds of millions, if not a billion dollars of gold within reach down the Swan Decline?"

GBM Gold chairman Eric Ng said his group's board and shareholders were "saddened by the decision" to liquidate its main operating subsidiary.

"It should be noted that GBM offered a DOCA [deed of company arrangement] that it believed would have been supported by most creditors," he said.

Mr Ng said the liquidation would give GBM Gold the opportunity to pursue debts it had claimed with Kralcopic's administrators.

GBM Gold's push for a deed of company was not connected to the consortium's bid.

GBM Gold was exposed to a crisis generated when Kralcopic lost permission to mine in Bendigo back in 2019, and which came to a head with a recent unsuccessful Supreme Court bid to regain those rights.

However, the company still holds mining and mineral exploration rights to other central Victorian plots of land.

Creditors had expected to have their own say on the strengths and weaknesses of GBM Gold's proposed deed of company last week at a meeting with administrators.

That was delayed to April 29 with less than 24 hours notice.

A slew of developments forced administrators to delay any discussion or vote on GBM Gold's proposal.

One was that the government had dramatically increased the amount of money it wanted to claim back from about $918,000 to nearly $10.5 million.

The Bendigo Advertiser has now obtained an "urgent" communication from Kralcopic's administrators - specialist insolvency agency Worrell's - which was sent to creditors before the Federal Court's ruling.

It gives an insight into developments over the course of the week which culminated in the court making its decision.

The administrators wrote that "the Minister [Jaclyn Symes] recently conveyed to us in some detail her belief that the proposed deed is not in the public interest and ought not recommend it to creditors in its current form".

Their letter went on to warn creditors that "if you wish to be heard on the adjournment of the winding up application, we strongly urge you to contact a solicitor immediately as you may have just hours in which to act. We would be unable to assist you in this endeavour".

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Attached to the letter was an affidavit detailing administrator's discussions through the week with the minister's lawyers.

The affidavit warned that "complex legal arguments" had been raised which would have required more time to work through, if administrators were to continue their work.

The administrators said they would need to further delay any vote on Kralcopic's future while they investigated options, assuming the Federal Court did not appoint liquidators.

The affidavit suggests that the government has again revised its claims of debt down from $10.5 million to about $3.8 million.

The mining regulator has since told the Bendigo Advertiser it is still working through and revising costs for rehabilitating Kralcopic's old sites.

It plans to consult with liquidators on costings for what it believes to be a complex long term rehabilitation, Earth Resources Regulation executive director Anthony Hurst said on Saturday.

"We will keep the community updated as this plays out," he said.

"As we reach points with the regulator where key aspects of site rehabilitation can be shared, for example, we will certainly be on the front foot.

"There is planning that will happen over the next few weeks."

This story was updated at 12.35pm with GBM Gold's reaction to the liquidation announcement and again at 1.27pm with extra details about money already set aside for environmental works at Bendigo sites.

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