A COUNCIL has been forced to write off a debt of more than £124,000 over a failed flagship restaurant in a town’s premier entertainment venue because it never created a proper lease.

The creation of the East Z East Indian eaterie in Blackburn’s King George’s Hall was hailed by councillors as a major coup after the council spent £50,000 refitting the former Blakey’s Bar.

But on Thursday night Blackburn with Darwen Council finance boss Cllr Vicky McGurk asked its executive board to ‘write off’ £124,682.94 in unpaid debts by two companies involved in the venture.

She did not name the restaurant in the public part of the meeting but the Lancashire Telegraph can reveal the subject was East Z East whose original parent company was dissolved on January 28.

Cllr John Slater, leader of the council’s Conservative group, accused the authority of ‘incompetence’ over this and other debt write-offs including £45,506.51 for another restaurant which went bust.

The Lancashire Telegraph can reveal this was Gioia Italiano in Church Street, Blackburn.

Overall the executive board wrote off £399,581.27 from five companies and a landlord.

The public write-off documents for the East Z East Blackburn company, which owed £53,389.28, reveal: “It has been identified no invoices were raised during the occupation of the property as no lease was in place to enable the finance team to bill the occupier. This has resulted in the failure to collect funds due.

“In view of the fact that the occupier is a company that has been dissolved, coupled with fact that there is no executed lease in place it would be very difficult to legally pursue for the debt.”

The public papers for the second company, which owed £71,293.66, reveal: “A new company with a similar name took over.

“No invoices were raised during this company’s occupation of the property as no lease was in place.

“The figures reflect a £20,000 payment made by this company towards outstanding rental costs.

“Currently there are ongoing discussions as regards a lease with a potential third company who wish to trade under a similar name from the premises.”

Cllr Slater told the executive board: “This is not very good. You have buried all the details in part two so the borough can’t see your incompetence. It is really bad.

“Some of these were hailed by certain executive members as being superb and a great assets to the borough only for them not to be.

“Have we put in robust situations to make sure this won’t happen again?”

Cllr McGurk said: “There is currently an internal review ongoing which will ensure that we have robust processes, more robust processes than we have previously had. However I have to say these issues are the exception rather than the rule.”

Cllr Slater said after the meeting: “This is sheer incompetence with council taxpayers’ money. It involved a well-known restaurant using major council premises. I regard this extremely seriously.”

A council spokesman said: “The council is transparent in its debt write-offs. It is normal process for any debt over £30,000 to be reported to the executive board. The report covers a number of circumstances and there are legal rules we have to follow.”

Former England footballer John Barnes and former Labour leader Jeremy Corbyn were among diners who used the East Z East restaurant in Blackburn.