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Director Peter Duncan confirmed that his company Aquafarm would be forced to shut the Ronas fish factory, in Ronas Voe, next weekend unless new work can be found.
The factory, which employs 11 people, has fallen victim to the recent buy out of an organic salmon farm which supplied its fish.
The workforce was issued with redundancy notices at the beginning of the month, and unless a rescue package can be found they will be out of work next week.
Local councillors are already working with the factory's management to find seafood related work to replace its contract with Scalloway-based North Atlantic Sea Farms (NAS).
In June NAS, thought to be the largest organic salmon farm in the world, was sold by its owners John and Wilma Goodlad to Lerwick-based Hjaltland Seafarms for £3.8 million.
Norwegian-owned Hjaltand operates its own factory, Lerwick Fish Traders, at Gremista, where the NAS fish will now be processed.
The move reflects the consolidation of Shetland's salmon farming industry into the hands of fewer players, with Norwegian interests now owning more than 80 per cent of the fish farms.
Mr Duncan said last night he had no option but to close the plant when the company lost the contract to process salmon from NAS.
"Staff have been issued with notices, but we are still looking at all possibilities. If we managed to get new contracts, we would re-employ people, but we can't carry on if it is not viable. It is not very good for Northmavine," he said.
Last night Shetland North councillor Alastair Cooper vowed to do everything he could to find work for the factory.
"I am extremely disappointed at the fact that once again the future for the factory is uncertain, but I believe that there are still one or two options for keeping it going and hopefully return the workforce," Mr Cooper, a former council development manager, said.
"I am keen to work through as many options as we can during the next few weeks. I have been speaking to Peter Duncan about potential seafood alternatives."