THE owner of a £14m theatre has agreed to help a handful of creditors left out of pocket when the former managers went bust, it was revealed last night.

Durham City Council has awarded grants to four local organisations affected by the demise of the Gala's management team.

The move has angered dozens of creditors who lost thousands when The Entertainment Team Durham - the management company running the theatre on the council's behalf - crashed with debts of £700,000 earlier this year.

The Northern Echo has learned that following a request by council chief executive Colin Shearsmith, the authority's cabinet agreed in private to make grants totalling £13,770 to groups deemed to be "seriously destabilised" by their losses.

These included Durham Amateur Operatic Society, the City of Durham Light Opera Group and Durham High School for Girls.

The authority said that they were grants for the arts and as such entirely separate from any losses incurred as a result of dealings with the Gala.

But last night, other creditors attacked the move.

Dave Hudspeth, whose Billingham-based Reverse Image Photography is owed more than £1,100, said: "Where do they draw the line? I've not received a penny back of my money.

"The council either don't pay anyone or pay the lot."

The decision to award the grants was backed by Liberal Democrat group leader Councillor Sue Pitts.

She said: "It would be nice to pay all the creditors although that is not possible.

"This is a way of paying amateur groups who lost their money.

"They are not receiving this as creditors but as amateur groups who are entitled to arts grants."

Mr Shearsmith said: "It is standard practice at the city council when awarding grants which involve confidential information being divulged about organisations that these are carried out in private.

"The organisations involved are valuable assets to the district and the region, and provide excellent entertainment as part of the community arts environment.

"The grants acknowledged that fact. Local people benefit from the existence of these groups, both as audiences enjoying the productions and in getting involved themselves."

The theatre is currently being run by the council.