The distribution produced by Mandriva was formerly known as Mandrake Linux. The company is no stranger to financial difficulties, having gone through several convulsions in the past.

According to a two-page letter (page 1, page 2) from the chief executive, Dominique Loucougain, to shareholders, which was posted to the Mandriva forum, LinLux (formerly Occam) had turned down both recapitalisation schemes proposed for the company.

Another investor, Townarea Trading and Investments, had offered to bear the entire €4 million recapitalisation. Loucougain wrote that fresh infusion of money was a must, failing which the company would have to shut shop on January 16.

The recapitalisation was first proposed on September 30; LinLux objected to it at the time because there no contract between Mandriva and a Russian firm, Rosa Labs, which is involved in development of the Mandriva GNU/Linux distribution.

Loucougain wrote that, following this, a contract had been entered into and a fresh meeting of shareholders held on December 5. At this meeting LinLux, which owns 42 per cent of Mandriva, had rejected both recapitalisation schemes proposed.

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One scheme proposed a capital increase of €4 million reserved for two main shareholders, Town Area and LinLux, and reduction of capital of €6.3 million carried by the two.

In the event of either of these shareholders not being agreeable, the capital increase of €4 million was to be reserved only for shareholders who had subscribed to the capital increase and the reduction of capital of 6.3 million would have to be supported by the two main shareholders.

If the company shuts shop, the distribution, which is developed mainly by Rosa Labs and the Brazilian company, Conectiva, which was acquired by Mandriva six years ago, may continue to be released.

But for users there is a fallback - in September 2010, some developers forked the Mandriva distribution, with the new distro being known as Mageia.

Mandriva began life in the late 90s as Mandrake Linux. With Red Hat Linux as its base but the KDE desktop environment instead of GNOME, it was at times known as "Red Hat with KDE"

A change of name was effected in 2005 after it lost a case filed by Hearst Corporation which had the rights to the name Mandrake. From MandrakeSoft it became Mandriva, coinciding with the acquisition of Conectiva, another GNU/Linux company based in Brazil.

Mandriva (then known as Mandrake) filed for bankruptcy in 2003 and emerged from that state the next year. In 2008, the company was badly affected by the global financial crisis and had to jettison all its external contributors.