THE creditors of a theatre management firm that collapsed owing nearly £700,000 shortly after the prestigious £14m venue opened are unlikely to get their money back.

The Entertainment Team (Durham) was set up to manage the Gala Theatre for Durham City Council, but within four months of the theatre opening in 2002 - and just two weeks after the venue was visited by the Queen - it ceased trading and went into voluntary liquidation because of massive financial problems.

It had debts of more than £693,000 owed to 150 creditors, including traders, companies ( Newsquest, publisher of The Northern Echo, was one), amateur theatre groups and the council itself, and few assets.

Liquidator Alan Marlor will tell a creditors meeting on Friday, August 26, that it is unlikely that £34,715 owed to Customs and Excise and to the Department of Trade, the preferential creditors, will be paid and "it is unlikely any distribution will become payable to the unsecured creditors".

He says: "The only realisations to date have been amounts received from City of Durham (the council) in respects of petty cash floats and food and beverage stocks taken into their custody."

Mr Marlor says he has looked into a number of inquiries into the conduct of the company's affairs which have led to the possibility of some recovery.

"Without contingent funding , which has not been forthcoming, I am unable to pursue these inquiries. I therefore propose to conclude my administration of this estate shortly."

He adds that he had sent a report on the directors' conduct to the Department of Trade and Industry, which has requested that the document stay confidential.

A city council spokesman said there had been no movement on efforts to recover a £75,000 loan from the council to the firm, secured on the directors' guarantee, or more than £200,000 owed by the firm to the council, because of the directors' financial position.

A disastrous opening night featuring the band Westlife was blamed for plunging the firm into difficulties.

The council, which had hired the firm, took control of the venue's management and still runs it. It blamed decisions by the Entertainment Team (Durham) for the problems.

The firm's directors, Nicholas Rule and Mike Power, who both went bankrupt, complained to police about the council's handling of the Gala, but police decided not to launch a formal investigation.

The level of subsidy the theatre receives from the council is a sore point among some council tax-payers, but the council says it is now on a sound financial footing.

Simon Stallworthy, former manager of the Octagon Theatre in Bolton, recently took over the reins at The Gala, which was run by the arts team from Darlington Council, for a year.