THE Entertainment Team (Durham) Ltd has gone into receivership because of the catastrophic results of a decision it made about the opening event of the Gala. If the company had done as it agreed in pre-contract discussions and financed the event through its parent company, it is possible it could be trading today.

Durham City Council could not have done more to check the company's financial stability and its ability to perform under the contract. Two sets of company searches were carried out through two separate specialist London firms, which showed the Entertainment Team to be more than capable of managing a multi-function venue of the size of the Gala. Extensive references were taken up.

There was never any evidence of a shortfall in working capital from the parent company. There were no liquidations in either of the comprehensive searches for either Michael Power or Nicholas Rule.

The Entertainment Team business plan was put together in conjunction with PricewaterhouseCooper on behalf of the city council. The accountants' advice, such as a reduction in the assumptions on catering income, was incorporated within the final plan. The business plan was also examined by consultants acting for the Millennium Commission and arrangements were discussed with the District Auditor. Two presentations by the company were given to councillors at all-party committees before we signed the contract.

The city council maintained constant monitoring of the company and insisted on a monthly financial meeting. Entertainment Team Durham withheld information on the vast expenditure of the opening show. The trading figures supplied by the company showed there would be a slight cash flow deficit of £75,000 which would be repaid by October. The city council funded the gap with a loan secured on personal guarantees. We will be taking legal action to recover that money. The performance levels at the Gala were in line with the accounts presented.

When creditors started to ring us after the cash injection from the council, we immediately took action. Entertainment Team finally admitted the comprehensive position on May 16. The council's director of finance visited the London offices of Entertainment Team to examine all accounts and books on May 17 and, by May 23, we had ceased trading with the company. The entire operation took four working days and was as speedy, efficient and responsible as possible.

Delays in the opening of the Gala bar, cafe and restaurant were due entirely to Entertainment Team's failure to deliver. The company, as part of its contract, was meant to fit out the kitchen, but it was neither designed nor equipped in time.

The city council used the launch event to invite influential figures and bought, at full price, 250 tickets. The venue is now under our management for 13 weeks, during which time we will be fully investigating how best it should go ahead. We are currently talking with national and local producers, consultants, groups, directors and operators.

There is already interest from national operators in the running of the Gala. The programming has been reviewed and we have taken out weaker shows. This rigorous filtering will continue in the light of bookings. We are supplementing this with market research which will identify audience preferences.

We know there is some concern that the debts accrued by Entertainment Team will affect next year's council tax figures. We can reassure local people that there will be no knock-on effect from this year's invoices to next year's council tax bills.