Brighton-based lads' magazine Sorted has ceased publication after four issues, owing thousands of pounds.
Russell Church, the man who set up the magazine with a £1 million budget, has apologised for the failure, blaming backers who suddenly pulled the plug as sales plummeted.
The first issue had a print run of 250,000 copies. The last issue sold less than eight thousand.
The closure has left a trail of debt across Brighton and Hove with 20 employees and at least 50 contributors seeking payment.
Some journalists and art designers are owed up to £6,000 for work done on the national magazine.
It is believed debts could eventually be in excess of £200,000.
In 1999, Mr Church put companies of which he was a director into voluntary liquidation with debts of £53,000 after his previous attempt to launch a national magazine, Zit, failed.
He is now pondering his next move with his company Sorted Communications. The company was set up in June last year, 14 days after his ban on being a company director expired.
Mr Church, 43, said yesterday: "It was a very good idea to launch a national magazine for teenage boys out of Brighton.
"I have been let down by investors who decided there would be no more financing. I did not deal with the finances, I just arranged to set up the magazine and get it off the ground.
"We produced a good product and the magazine industry liked it. We had a print run of 250,000 for the first issue in January but it came out at the same time as Nuts and Zoo, and we could not compete."
Asked why he had set up another magazine two weeks after a High Court ban on him running a public company ended, he said: "I have to earn a living. I have been in this business 25 years and I am not the only one who has had problems."
Staff at the two-storey offices in Clarence House, North Street, Brighton, were told on Friday the backers had pulled out.
They were told to clear their desks and take any of their items of value, such as photographic and art equipment. Other staff and contributors have been told to make appointments to collect their belongings.
Locks and security codes have been changed.
A hastily scribbled note reading "Office is Closed" has been placed on the door. A total of £100,000 was spent on decoration, furniture and fixings, much of it done by Mr Church's wife, Paula.
His brother-in-law Colin Etherington worked as the main sales executive.
Worried contributors promised money for photographs, artwork and articles have been visiting the office to see if they will be paid.
An art director, who worked on three issues, said: "Everyone is really annoyed. I am owed at least £5,000 for work done and my brother £6,000.
"It could have been a successful magazine but the marketing was wrong. It was a lively and colourful magazine."
Jed Novick, 45, the commissioning editor, said: "Russell was paying London wages to work in Brighton and as there are a lot of journalists and art-based magazine people in the city, he had a lot of talent to pick from, especially from people fed up with commuting."
Another contributor, who is still trying get some of his personal items from the offices, said: "I am owed £1,000. I am sorry the magazine has failed as I think it had potential.
"Some staff are really angry because they moved to Brighton from London after being offered salaries of £20,000 to £30,000, have not been paid in the past months and are in financial trouble."
Sorted was a brightly coloured art and cartoon-based magazine aimed at 12 to 18-year-olds. The first issue had 100 pages and articles on violent computer games, haunted bedrooms and Kung Fu. It sold for £2.50.
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