French steel maker Ascometal has gone into administration putting up to 1,900 jobs at threat.
The news will be a cause for concern for socialist French President François Hollande who is trying to lower the country's high unemployment levels.
Ascometal had sales of €969m in 2011, but declining demand across the continent took its toll on the employer and eventually a Paris commercial court put the company into administration.
US based investment fund Apollo Global Management took the firm over in 2011.
The French government pledged it would find a long-term solution for Ascometal, which has six plants across the country and employs 1,900 workers, and claimed it had already received expressions of interest.
"The coming weeks will be devoted to finalising these potential offers," Arnaud Montebourg, the French Minister of Industrial Renewal said.
The move came after Apollo failed to reach an agreement with its creditors, Morgan Stanley and Bank of America, on a debt restructuring.
A spokesman for Ascometal confirmed that the company has gone into receivership.
Apollo Global Management declined to comment.