Jalco Group, a Sydney manufacturing business run by a member of the Smorgon dynasty, is under financial pressure amid fallout from the collapse of Tony Ferguson Weight Loss.
Accounts filed by Jalco, which is run by Barry Smorgon and John Tisdale and employs 750 people, show it made losses in both 2012 and 2011, with questions raised last year as to whether the company was a going concern.
Jalco lost $6.4 million in 2012 and $1.4 million in 2011.
It also took a $10 million hit from its investment in an ill-fated bid by the Tony Ferguson group to expand into Britain.
Two sources said Jalco was likely to be the largest creditor of the Australian Tony Ferguson group, which was put into administration on Tuesday.
Tony Ferguson sells special diet food, manufactured by Jalco, through a network of pharmacies. It is estimated the business might owe Jalco as much as $7 million.
In addition to making the products, Jalco owns 49 per cent of Tony Ferguson, where Mr Smorgon and Mr Tisdale are directors.
Jalco acquired the stake and the board seats in 2011 for $4.65 million, with the remainder of the company remaining in the hands of its founder, chemist Tony Ferguson.
Jalco's accounts show it also paid $5 million for 20 per cent of Tony Ferguson UK in 2010.
The following year, Jalco paid just $1 for the remaining 80 per cent of the British operation and wrote off $6 million in bad debts it had run up.
"After assessing the future cash flows of this entity, the value of the investment was written off," the company said.
As of June 30 last year, Jalco's current liabilities exceeded current assets by $14.3 million. The company said this was due to its having pledged its outstanding invoices to ANZ as security for a $14 million loan.
"Directors are satisfied that the company will be able to meet its working-capital requirements through the normal cyclical nature of receipts and payments and the budgeted cash flows generated from operations," the company said.
Jalco's 2012 accounts are the most recent available, as the company has yet to file its 2013 annual return with the Australian Securities and Investments Commission.
Mr Smorgon and a representative of administrator Adam Farnsworth did not return Fairfax Media's calls to their offices.