DARTMOUTH, NOVA SCOTIA --Scanwood Canada Ltd., a manufacturer of wood furniture for IKEA, was declared insolvent by a Halifax court and will look to regain its financial footing.

According to CBC News, The court placed Scanwood in creditor protection until March 3 and appointed Green Hunt Wedlake to monitor the company's situation.

Scanwood, which employs 248 people is continuing to manufacture ready-to-assemble wood furniture for IKEA.

"We now have a stay in place," Bo Thorn, chairman of Scanwood told CBC News. "We can focus on developing the plan to bring this company back to where it used to be and where it can be."

Scanwood reportedly received a jolt last month when RBC Royal Bank, unexpectedly requested payment of a $2.1-million line of credit.

Last March the government's Industrial Expansion fund presented Scanwood with a $4.75-million  loan to modernize the plant and make it more efficient. A major investment in an automated packing line resulted in the company announcing last June that it would lay off 35 workers.

Thorn,who last June told the Chronicle Herald that the company had been losing money for more than a year, said, "It's automating a process that requires less people to do the same thing.".

Scanwood was originally established as Swedwood by IKEA. In 2004, IKEA sold the operation  to Tommy Holmer, past President and CEO of Swedwood Canada Ltd..

Sweden-based IKEA, the world's largest home furnishings retailer, reported profits of $3.9 billion in 2010.