The miner said its application to the Botswana High Court to put its 60%-owned subsidiary Leboam Holdings into "provisional liquidation" would be heard on Wednesday.
But the company's 40% shareholder, Bermuda-registered ZCI Limited, has asked the court for a "judicial management order", with the hearing to be held on Tuesday.
Leboam operates the Mowana copper mine.
If Cradle Arc's provisional liquidation application is accepted, Leboam's assets will be taken over by an administrator but not sold.
A winding-up order can be made after the provisional liquidation order is in place, and this would mean Cradle Arc shareholders are left with nothing.
The company's shares have been suspended since December 7, when it also stopped mining.
A restart looks unlikely, with Cradle Arc saying equipment owners had pulled their property from the site "pending settlement of outstanding and overdue creditor balances".
CEO Kevin van Wouw said provisional liquidation would help remove some of the pressure from the situation.
"While it is unfortunate that we have had to take this step, provisional liquidation as opposed to final liquidation is by no means the end for Mowana, but rather provides the company an opportunity to continue talks, along with the provisional liquidator, for a sustainable funding solution at the mine," he said.
This development comes after Cradle Arc could not complete a conditional US$4 million extension to its working capital facility with Fujax Minerals and Energy.
The company said the working capital facility extension for Leboam had been conditional on the completion of certain documentation and final approval from Fujax's credit committee.
All had seemed fine, with Fujax advancing $1 million to Leboam before the facility completion, but it then did an U-turn, saying it wouldn't allow any further drawdowns unless it was granted security over Leboam's interest in Mowana in respect of the working capital facility and all other indebtedness due to it.
This was easier said than done, with Cradle Arc requiring consent from the holders of the $10 million secured loan notes, which mature in April 2019, and ZCI Limited, to share their security over Mowana with Fujax.
The company had started negotiations to this end but did not seem optimistic there would be a favourable outcome, saying "to date, such negotiations have not been progressing in a positive direction".