MONSON, Maine — The Passamaquoddy Tribe has decided not to purchase Moosehead Furniture Co., prompting Machias Savings Bank, the mortgage holder, to place the company up for auction once again.

An auction has been set for the property and its contents at 10 a.m. Tuesday, Aug. 31, at the company’s Chapin Avenue location.

The Indian tribe’s interest forestalled an auction of the furniture-making company in January, but the results of a feasibility and impact study conducted by the tribe later failed to persuade it to move forward with the purchase.

“I personally think it’s a good project,” Gov. William Nicholas of the Passamaquoddy Tribe’s Indian Township reservation said Tuesday of the company. Tribal members had considered starting up the manufacturing process again and opening up a large wood pellet mill at the location.

“It was presented to our local council and they decided not to move any further with it at this time,” Nicholas said.

He said the timing and the fact the tribe wants to focus on several other projects it has under way played a role in the decision.

“We don’t want to bite off more than what we can chew right now,” he said.

Nicholas said the tribe is in a very good financial situation compared with where it was four years ago, and it wants to maintain that status.

Monson Town Manager Julie Anderson said Tuesday she was “very disappointed that things didn’t work out the way we had hoped.”

She said she is hopeful, however, that someone will do something in the future with the buildings.

The business, which previously operated as Moosehead Manufacturing Co., was operated by the Wentworth and Durham families of Monson for 60 years. In early 2007, the families closed the business, in part because of competition from low-priced imported furniture. About 125 employees lost their jobs when the mill closed.

Hoping to revive the business, Tardy-Connors Group LLC, consisting of Joshua Tardy, a lawyer and then-Maine House minority leader, and Dana Connors, president of the Maine State Chamber of Commerce and former state transportation commissioner, secured enough funds for its purchase and began manufacturing under the new name of Moosehead Furniture later in 2007.

Two years later, however, they found they did not have the capital to weather the poor economy. They, too, shut the doors, putting about 30 employees back on the unemployment rolls.

When they did that, Machias Savings Bank, the primary lender for the new business, placed the property and equipment up for auction. Just seconds before the auction was to have begun in January, it was announced that Tardy and Connors had filed Chapter 11 bankruptcy proceedings. That stopped the auction and allowed the partners to work with the tribe.

While the Passamaquoddy Tribe is no longer at the negotiating table, Tardy said Tuesday that discussions are continuing daily with interested third parties in the hopes of staving off the auction, but it could take place this time around.