Staff have been sent home from a digital media business which is heading towards insolvency.
The chief executive of Moshen, based at The Storey in Meeting House Lane, has been suspended after another company, which invested more than £800,000 in it, found financial irregularities in the business.
Media investment company Concha said it had been made aware of a “significant creditor claim resulting from a material contract which was not disclosed as part of the due diligence exercise performed prior to its investment”.
Moshen is the largest tenant at The Storey, meaning closure will come as a blow to Lancaster City Council, which owns the building and relies on the rent to run it.
In a statement on its website, Concha said it had provided around £867,000 in funding to Moshen, comprising £400,000 equity, and £467,000 as secured term loan.
The statement added: “Concha has been informed that the board of Moshen intends to appoint a firm of insolvency practitioners without delay to assess the potential recovery of value, if any, for creditors and shareholders.
“Chris Akers, executive chairman of Concha, is Concha’s representative on the board of Moshen and is currently the sole acting director following the suspension of the chief executive on August 18.”
No-one from Moshen was available for comment as the Lancaster Guardian went to press.