DETECTIVES are looking into allegations made about the collapse of the firm hired to run a new £14m theatre.

The former directors of the Entertainment Team (Durham) are understood to have lodged a complaint about Durham City Council's handling of the contract the firm had to run the council's Gala Theatre.

The company went into liquidation last year, owing more than £700,000, weeks after the Queen officially opened the theatre, which is in the flagship Millennium City complex, part funded by the Millennium Commission.

The council, which blamed the firm for what happened, took over the theatre's management "for the foreseeable future".

Officers in Durham Constabulary's economic crimes unit are looking into allegations made by the firm's directors, Nicholas Rule and Michael Power, who both went bankrupt as a result of the firm's collapse.

The pair, who live in the South, submitted their paperwork at a London police station in October. The Metropolitan Police have forwarded the documents to Durham.

Detectives are reviewing the material to see if the evidence warrants a criminal investigation.

A police spokesman said: "We are evaluating the material that was submitted in support of the allegations made by the two men who walked into the police station in London.''

Meanwhile, the council's internal inquiry is continuing into claims that theatre staff held an unauthorised after-hours party in the building at Halloween.

The North-East Ambulance Service has confirmed it was called to the theatre shortly after midnight after a woman reportedly suffered a fit.

The council announced the investigation late on Thursday - along with plans to look at the loss-making theatre's management and options for the future.

But some theatre staff say the party was authorised, was low key and that they have no knowledge of anyone being taken to hospital.

The council's Liberal Democrat leader, Sue Pitts, said action over the party would be taken if necessary.

She was not aware of the complaint made by the two former directors but added: "If there is something there to be looked at we would be very happy to co-operate with the police."