ICONIC kids fashion brand Pumpkin Patch is in crisis, with shares placed in a trading halt after creditor negotiations stalled.

The struggling New Zealand listed company, which has stores in Australia, said in a statement to investors that the business remained “significantly over-leveraged and capital constrained”, admitting that it was now virtually worthless after its debts — including $43.2 million ($NZ46 million) owed to ANZ Bank — are taken into account.

“Shareholders should note that it is highly unlikely that there is any residual value in the company’s equity,” the statement said.

The regulator placed a trading halt on Pumpkin Patch shares at the company’s request on Friday morning, shortly after the opening of trade.

Despite the uncertainty about the company’s future, staff working at its retail stores remained unaware of any trouble.

“I haven’t heard anything, we don’t know anything about it,” a worker told the New Zealand Herald.

“My store manager had no idea either — she’s training some new casuals at the moment. Does that mean we’re going to lose our jobs?”

The trading halt comes after the value of Pumpkin Patch shares fell 49 per cent in the last 12 months, including a 16.6 per cent drop on Thursday, after posting $15.5 million in losses over the last financial year.

The debt-laden retailer was unable to find a buyer when it was put up for sale last year, and has blamed store closures and declining sales for its woeful performance.

“Banking facilities are in place that provide the working capital necessary to enable the company to trade and to fund a limited level of essential capital expenditure,” the company said.

“Our ability to move forward from here is impacted by the lack of available capital for debt reduction and reinvestment. This represents a material risk to the ongoing viability of the business.”

The statement said discussions with ANZ had “generated substantial uncertainty, which remains ongoing, regarding the company’s future in the context of its current financing arrangements”.

dana.mccauley@news.com.au