Devon County Council (DCC) has refused to bail out the Morwellham Quay tourist attraction near Tavistock in West Devon, raising the prospect of the trust operating it having to appoint an administrator.
DCC rescued Morwellham Quay three years ago when it was in danger of becoming insolvent and has so far paid out £1.2m (US$1.98m, 1.37m euro) of taxpayers money to the trust. However, the council's new Conservative leadership has said that no more public funds will be made available.
Council leader John Hart said that the loan was always intended to be on a short-term basis but the authority would not immediately ask for repayment of the money it has already advanced. He also criticised the previous Liberal Democrat administration for lending Morwellham Quay - a Victorian-era historical themed museum and visitor centre - the money in the first place.
He added: "The trust was warned then that they had to come up with an effective business plan to market the attraction and begin to generate more revenue. That has not happened. However, we agreed a further £200,000 (US$330,790, 228,495 euro) to enable operations to continue until the end of September, based on some more optimistic projections."
Since any further money would have been entirely dependent on the production of a workable business plan, which DCC claims has not been forthcoming, the council voted to end its financial support.
Following an emergency meeting held on 4 September, a press release issued by the Morwellham and Tamar Valley Trust said that while it is considering a range of options, it believes that the appointment of an administrator would be "the worst possible solution for all stakeholders, including the public.
"Such a course of action would result in a liquidation of the Trust's assets, potentially crystallising losses in excess of £5,000,000 both for the Trust and for the other public funding bodies that have invested in the site."
As a result, administration would only be considered as a last resort if all other funding initiatives fail.
A further meeting of the trust is scheduled for 11 September, at which time an update on the situation will be issued.
