All 400-plus workers at Norway's Kleven Verft will be laid off as the yard begins its bankruptcy restructuring.
Their re-employment will also depend on the court-appointed trustee bringing in new contracts.
Staff were notified of the lay-offs on Tuesday.
Trustee Bjorn Age Hamre told the E24 website that this is not a change in the "masterplan" to revive the yard.
Minimum staffing levels will be maintained only until a supply ship is completed, he said.
After that, workforce numbers will depend on the yard winning new jobs.
Uncertainty ahead
"The employees who will continue to work at the yard will be brought in again later," yard union head and board member Olav Arne Hoydalsvik said. "We don't know who it is or how many will continue to work."
Sunnmore District Court opened the bankruptcy proceedings on Friday. They also involve subsidiaries Kleven Maritime Technology and Kleven Maritime Contracting.
"We need to put in place investors and there is much else to be put in place — not least a new owner," Hamre said.
"We are continuing to work on some concrete tracks and in the next few days we will work intensely to land it."
The yard has debt of around NOK 300m ($31.2m).
Banks pulled the plug
The shipbuilder was forced to file for bankruptcy restructuring after banks pulled its financing and froze accounts in June.
Kleven was bought by Croatian shipbuilder DIV Group in January, from shipowner Hurtigruten.
DIV said it had experienced several obstacles during the integration of Kleven with its Croatian operations, including the Brodosplit yard.
DIV owner Tomislav Debeljak has said the loan agreement was terminated when he took over as new chief executive on 22 June.
Previous CEO Kjetill Bollestad resigned, saying he could not work with DIV.
Norway's Bankruptcy Act allows for all or part of a bankrupt business to be salvaged by a new or existing entity and form the basis of a viable business.
The succeeding entity can acquire all or part of the business from the bankruptcy estate and potentially from its mortgagees and pledgees.
Compatriot shipbuilder Havyard has been going through a similar process and spun off its shipbuilding operations into a new company.
Hurtigruten teamed up with banks to provide NOK 900m in new capital for Kleven in 2017 to secure completion of two expedition cruiseship newbuildings there.
Kleven had been reeling from major financial losses in January, accumulating NOK 1.2bn in debt in the last four years, TradeWinds reported.
