Basslink announced on Friday that it has entered into voluntary administration and appointed EY to oversee it.
The company said the move was a result of ongoing disputes with Hydro Tasmania, and an unsuccessful sale.
CEO Malcolm Eccles said administration was the "best way to effect change while protecting all stakeholders".
"Regrettably, against the backdrop of many issues and having exhausted options, Basslink needed to take proactive action to put Basslink in the best possible position to navigate forward through these challenges," he said.
"We know this is a challenging time for our small team and their wellbeing will continue to be at the front of our minds throughout the voluntary administration process."
Last month, the Tasmanian government kicked off legal action to have Basslink pay AU$70 million it was owed for outages that occurred to its Bass Strait cable in 2015 and 2016.
In December 2020, the arbitrator between the government and Basslink said the December 2015 outage was not a force majeure event, and hit Basslink with AU$38.5 million in damages.
In March 2018, the Tasmanian government sought AU$122 million in compensation due to the Basslink cable to the mainland, which carries electricity and data, being down for six months.
The outage lasted so long that the Tasmanian government got involved, with then-Minister for Information Technology and Innovation Michael Ferguson also reprimanding TPG for not buying additional capacity on Telstra's alternate cables during the outage.
Basslink and the government then engaged in a war of duelling reports, with the government-owned Hydro Tasmania saying the outage was caused by the operating limits of the cable being exceeded, while a Basslink report put forward dismissed the claim was a result of a force majeure event.
"The Basslink Interconnector continues to operate efficiently and reliably, connecting Tasmania to the national electricity market. We continue to serve the communities of Tasmania and Victoria, providing a reliable and sustainable source of energy," Eccles added on Friday.
KPMG has been appointed as receivers and managers by Basslink's lenders