Waverley Woollen Mills was already in voluntary administration when it was placed in receivership.

John and Teresa Fahey had called in the administrators two weeks ago.

Administrator Steven Hernyk, of Deloitte Touche Tohmatsu, held a creditors' meeting involving about 40 people last week.

But no offer had been made to creditors and another meeting had been scheduled for June 8.

Industry sources yesterday said there were signs that under administration, the company could have traded out of problems within a few months.

Staff yesterday said they had been stunned by the sudden receivership move and hoped the business could continue.

They said that despite claims the Australian textile industry had been killed off by cheap Chinese imports, Waverley had fought off that threat years ago and now filled a valuable niche market supplying high quality products such as blankets to department stores and airlines. The Faheys bought the mill in 1990, in part with a $400,000 State loan, and undertook a major machinery upgrade.

The receivers are not expected to make a decision on the mill's future for several weeks.

However, sale of the business as a going concern will be the receiver's first option.