THE advertising agency chosen to launch development agency One NorthEast's Here.Now campaign has ceased trading.

Negotiations are continuing to discuss future options for the Newcastlebusiness, which is one of the highest profile agencies in the North-East.

Mike Pott, recovery partner at accountancy firm RMT, said possible options included the receivership or liquidation of the business.

He said: "We will know in the next couple of days what the preferred option will be. But one thing is clear, Yellow M won't be able to continue in its present form."

The future remains unclear for the 25 staff employed at the business. It is also unclear if they will receive any redundancy pay outs.

But the future of the One NorthEast advertising campaign, which uses stars, including Sir Elton John and opera singer Lesley Garrett, to praise the virtues of the North-East, is not believed to be in doubt.

A spokesman for the One NorthEast said: "Yellow M was commissioned to design an image and implement a short advertising campaign.

"Further phases of the campaign are already in place and will take place as planned."

A sister company in Edinburgh is currently going through the process of a management buy out.

It is unaffected by the Newcastle firm's decision.

Yellow M was established in 1992 by managing director Mike Dethick. It also has offices in London's Covent Garden.

Last year, the company won the £10m contract to run the Conservative election campaign.