His former chief of staff Rikki Lambert has announced himself at the candidate for the vacant Senate seat.
In a statement on Tuesday Senator Day said the major investor that had been examining his Home Australia business over the past fortnight had decided not to proceed.
He tendered his resignation to Senate President Stephen Parry, effective immediately.
"It has been an honour and a privilege to serve as a senator for South Australia and I am sorry it has ended this way," he said.
"I will now devote my time and energy to assisting those who have been affected by the company's closure."
