RURAL property experts have warned a fire sale of Timbercorp's assets could trigger a collapse in land prices.
The managed investment scheme giant faces financial oblivion unless it can repay $20.5 million by May 1 on its $562.9m debt.
Timbercorp has already tried and failed to sell 40,000ha of plantation timber, 2700ha of olive groves and 380ha of almond plantations, along with 18,000 megalitres of water to cover its debt repayments.
But if Timbercorp goes into receivership, property analysts fear it could swamp the property market with 98,000ha of eucalypt plantations, 11,909ha of almond orchards and 6350ha of olive groves.
One property expert, who did not wish to be named, said Timbercorp's financial woes could not have come at a worse time for family farms trying to sell.
"Many viable, genuine family businesses might now find they face a major reduction in the value of their properties," the expert said.
Agricultural economist and valuer Sam Paton said the rural property market was already vulnerable, with most industry analysts forecasting a 20 per cent drop in property prices this autumn.
"The (property) gold rush of that period from 2004 to September 2008 is over," Mr Paton said.
"MIS operators were paying a premium of 20-30 per cent compared to farmer-to-farmer transactions, but that's over."
But Mr Paton was far more cautious in assessing the impact on property values of Timbercorp going into receivership.
"It's difficult to gauge because of the incredible complexity of Timbercorp's structure and growers' (MIS investors') interests," he said.
Grower-investors could block or delay any asset sales until their harvesting rights to tree or orchard crops were met or they were paid out, which could take years to resolve.
Timbercorp spokesman Matt Trewin said a transfer of ownership of the company's assets would not extinguish growers' harvesting rights to trees, almonds or other crops.
However, it remains unclear whether receivers would be able to extinguish investors' rights if Timbercorp Limited folded.
Last year's wind-up of MIS company, Environinvest, was left in limbo until February this year as 320 grower-investors blocked the receivers' attempts to sell the land, based on the their harvesting rights to the bluegum plantations.
While a wind-up order has now been granted, Environinvest investors have mounted an appeal.
Any fire sale of Timbercorp's assets would be delayed because much of the land and the 120,000 megalitres of water it controls is held in independent ASX-listed infrastructure funds and trusts.
The Timbercorp Primary Infrastructure Fund independently owns 4160ha of almond and citrus orchards in Victoria and South Australia, plus 52,000 megalitres of water, which is leased to Timbercorp investors.
Timbercorp Orchard Trust owns citrus and tablegrape vineyards in South Australia and NSW, which includes another 11,000 megalitres.
These assets are quarantined from any claims by receivers, given they are independently owned.
The water held by these funds is worth about $152 million and is owned by independent unit holders.
In the meantime, Timbercorp's 180 employees and a further 1500 workers and contractors in allied companies face an uncertain future.
Glenelg Shire Council Mayor Geoff White said southwestern communities were very disappointed by Timbercorp's financial woes and worried about job losses.
"Jobs are really crucial in this region, especially with the current financial situation, so we are really concerned about what this might mean," he said.
Cr White said he remained optimistic bluegum plantations would still be harvested, but said any further delays to the harvest - which is already overdue for several plantations - would be another set-back for the region.
An additional 1000 jobs had been expected to be needed during harvesting, but a cloud now hangs over whether these jobs will ever eventuate.
Cr White said it was vital for a planned bluegum chipping facility to go ahead at Portland, to allow timber to be shipped from the region.
Mr Trewin said Timbercorp was still in discussions with the Port of Portland about a built-for-purpose facility.
But the project's future is under a cloud, leaving investors with plantations that cannot be viably harvested, given the freight costs to more distant ports.
Economist and forest industry analyst Judith Ajani said if Timbercorp did not survive, most of the 98,000 hectares of plantation land would ultimately be picked up by other forestry interests.
She said the disconnect MISs created between plantings and market forces meant the hardwood market was oversupplied and the wood worth little.
