The owner of Creation nightclub in Brighton has gone into administration after being hit by the collapse of two other club groups.

First Leisure, which owns 28 nightclubs across the UK, was left facing heavy rent arrears following the failures of Brannigans pub chain and part of Springwood leisure group.

These companies had taken over leases on ten premises originally owned by First Leisure.

Following their demise, the financial burden reverted back to First Leisure, which had acted as guarantor on the leases.

However, the move into administration is unlikely to lead to the closure of Creation, in West Street, which boasts the city's biggest student night and DJ slots from the likes of Norman Cook.

Instead, City analysts believe First Leisure, which owned Eastbourne Pier until 1988, will renegotiate the terms of the lease deal and ultimately buy back the business from the receivers.

First Leisure was once part of the leisure conglomerate built up by Lord Delfont, which was subsequently broken up by his nephew Michael Grade, the BBC's new chairman.

Receivers RSM Robson Rhodes have been appointed to salvage the company, which employs 1,600 people in clubs across the UK.

The business was formed from a management buyout in 2000 led by Candover with support from 3i and PPM Ventures.

The deal originally valued the company at £220 million, including £80 million of equity and bank debt of £140 million.

Candover is understood to have realised half of its stake through a sale and leaseback of some of First Leisure's property after the buyout and is understood to have written off its remaining investment.

Simon Bower, of Robson Rhodes, said: "First Leisure is the latest casualty of the decline in the nightclub sector. The group has, however, a core business that is essentially sound, around which management has developed sensible plans for the future.

"Our key objectives are to preserve the business and secure the employment of the 1,600 employees. We will be working to ensure it is business as usual."

Lisa Mann, marketing executive at Robson Rhodes, said: "In the context of a declining industry, being lumbered with the additional burdens of Brannigans and Springwood has exacerbated the situation.

"It appears to have been the final straw in an increasing amalgamation of problems."

Friday May 14, 2004