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Pike River Coal contractors pushing for the company to be put into liquidation should tread carefully, Grey District Mayor Tony Kokshoorn says.
"I understand the contractors' need to get their money back but I think that we're at a very crucial point at the moment, with the receivers already saying they're going to sell the mine and tender it," Mr Kokshoorn told NZPA.
An explosion at the mine last November killed 29 workers and ended a business venture that was just starting to produce coal after years of setbacks.
Receivers PricewaterhouseCoopers were appointed in December.
Mr Kokshoorn said he was worried liquidating Pike River Coal would put a stop to any effort to recover the men's remains.
"If the receiver thinks that there is a liquidator coming through now, that might halt the recovery operation," he said.
The contractors push to liquidate the company would only result in "more people at the trough" waiting to be paid, including lawyers.
"I'm all for the contractors getting money but they are in a tough situation because they sit at the bottom of the pecking order and the receivers have already indicated that probably most of those unsecured creditors won't get paid, which is sad...
"But I would hate to see the recovery thrown out with the bathwater here."
Mr Kokshoorn said it was important to recover the remains.
"Four or five of the families are entirely satisfied that their loved ones are in the mountain for ever but the remaining families are desperate to get anything of their loved ones out. They'll take a belt buckle -- anything."
At least 12 companies had indicated their interest in buying the mine, including state-owned coal miner Solid Energy, he said.
Solid Energy had said it would try to recover the remains of the men and also pay unsecured local creditors.
The group of unsecured creditors, owed almost $5 million, intended to apply to the courts to start the liquidation process this week.
"We believe it will actually lead to an early sale of the mine and hopefully that will speed the process up and hopefully lead to the recovery of bodies, if possible, and payment of our debts," group spokesman Peter Haddock told Radio New Zealand today.
Contractors were under severe financial strain and one group member went into receivership last week.
"Many of our members are in desperate need and, you know, we are coming up to five months now. It's a long time not to have a lot of money owed to businesses."
Mr Haddock said earlier it was distasteful the way things had dragged on and liquidation might provide an opportunity for an outside review of the receivers' actions.
Although the receiver will continue to control the disposition of assets, a liquidator will be able to review all payments the receivers have made and are proposing to make.
Receivers can keep a company trading and they act for those who appointed them. In a liquidation a company is wound up and there is a priority order to the payment of creditors.