The residual Hanover Finance, still directed by Mark Hotchin, appears to be demanding payment of $500,000 from Allied Farmers in a move that could put the latter company under.

The Hawera-based company has posted a loss of $5.5m in the six months to December 31, from a loss of $8.3m a year earlier.

Penny-dreadful stock Allied Farmers teeters closer to the abyss after the Inland Revenue Department issues a statutory demand.

Government support of troubled rural services company Allied Farmers will be put to the test after the firm reveals it must repay a $500,000 loan within 15 days.