The Playhouse has previously had funding problems

Administrators said all performances of Treasure Island had been cancelled but staff held a final performance.

On Wednesday night the board rejected an emergency loan of nearly �300,000 from the personal account of the theatre's artistic director.

The city council objected to the loan being secured against the theatre's lease. The venue had earlier admitted "short-term" funding problems.

The administrators had confirmed all 60 employees were redundant but, after being told the news, staff insisted the theatre would hold at least one more performance.

Poor attendances

The city council is a major stakeholder in the theatre but recently refused to advance a loan to deal with the financial problems. It had accused theatre bosses of "bad management".

In a statement, it described the closure as a "great disappointment".

"Now that the Playhouse board has taken the difficult decision to take the company into liquidation, the council will do all it reasonably can to ensure that the Playhouse building continues to play a crucial role in the cultural life of the city," the statement added.

The council confirmed it was in contact with the Arts Council to assess the future prospects for the theatre.

Creditors' meeting

A spokesman for the Arts Council said the move was "very sad" but insisted they had provided substantial extra funding.

The Playhouse had recently had difficult relations with amateur groups over use of theatre space.

BBC Radio Derby's theatre expert Andy Potter said the relationship with the community was crucial.

"There were questions over the choice of production, over the balance between ambitious projects and more popular shows.

"It's a difficult question but a lot of people felt there wasn't enough to appeal to the broader audience."

Theatre managers had blamed recent poor attendances on the opening of the redeveloped Westfield shopping centre which houses the Playhouse.