A North East theatre's "financial disaster" began when people failed to believe chart-toppers Westlife were its debut act, it is claimed.

The �14m Gala in Durham was the region's first new theatre in 50 years and was opened by the Queen.

But just seven months after opening its doors, it ran up debts of almost �700,000.

Durham City Council, which is now running the venue, says its troubles began with people thinking millionaire pop stars Westlife were just a tribute band.

Pop group A1 are owed more than �11,000

The council has agreed to fund the theatre, despite being owed �200,000 by the entertainment firm given the job of running the Gala.

A meeting of creditors in Durham heard London-based Entertainment Team (Durham) ran up debts of �679,000 since taking over the management of the theatre in October last year.

Directors Mike Power and Nicholas Rule faced some of the 160 creditors, who include the pop band A1, Durham High School for Girls and Durham Amateur Operatic Society.

Durham City Council's chief executive Colin Shearsmith said the firm's problems began with a disastrous opening event in January when, despite a sell-out inside the theatre for chart-toppers Westlife, sales for an outside marquee with a big screen flopped.

He said: "The only suggestion I can see is that people did not believe Westlife were actually appearing on a Sunday night in Durham.

"They perhaps thought it was some sort of tribute band."

The Gala Theatre was opened by the Queen

A council statement added: "Unbeknown to us, the situation was worse than had been disclosed. When it came to light the council stepped in. "

A statement from Entertainment Team (Durham) said: "The company was handed the building at the end of December 2000.

But it was not in a fit state for public occupancy until just before the first performance in January.

"A high profile launch event with Westlife as top of the bill was planned for January 20, 2002.

'Disastrous sales'

"Because the company had been able to book Westlife it was proposed to relay the event to a marquee in the grounds of the neighbouring school.

"Ticket sales were disastrous and the marquee event had to be cancelled."

Alan Marlor, appointed as liquidator, said: "It seems surprising that ticket sales did not go well in Durham. While the theatre was full, the marquee was cancelled."

Mr Shearsmith said checks on the company had been satisfactory before the contract was awarded.