Jobs lost as Sydney chicken plant closes

More than 450 factory workers in Sydney's west have been told they no longer have a job following the collapse of Red Lea Chickens.

The company was placed into voluntary administration on March 29, after six decades in business, due to its "unsustainable financial position".

The administrators said there was no option but to shut down Red Lea's processing plant in Blacktown which employed about 500 people.

Those working in the six company-owned stores are also out of work.

The NSW Farmers Association said 28 chicken farmers across the state are owed at least $4 million collectively.

The association says Red Lea's collapse could force many out of business.

"This could break a number of farmers whose future now lies in the hands of the administrators," association chief executive Matt Brand said in a statement on Wednesday.

Administrators McGrathNicol in a statement said: "The majority of staff have now been advised of their redundancies while a small number of employees will be retained on a temporary basis to support the orderly wind-down of operations."

The group's 22 franchisee stores will continue to operate as those retailers consider alternative chicken suppliers.

The administrators have launched an investigation into Red Lea's affairs and the reasons for its failure.

The company distributed chicken products to supermarkets, speciality butchers, restaurants and hotels, supplied by a network of farms and growers across NSW.

The NSW branch of the Australasian Meat Industry Employees Union did not want to comment.

The first meeting of creditors is scheduled for Thursday April 12. A second meeting, to be held in about a month, will determine the future of the Red Lea Group.