The company set up to finance Britain's newest university campus faced liquidation just three months before the campus opened.
The University of Lincoln project company had to draw up an emergency rescue package after failing to find the funds necessary for phase one of the programme, a board of governors' report reveals. The company had no financing scheme to meet the full costs of the Pounds 32-million first phase at the end of May this year.
If no rescue package had been arranged it would have had to cease trading and begin moves towards liquidation. It is the second time financial problems have threatened the Lincoln project.
Original plans for an independent University of Lincoln under the auspices of Nottingham Trent University had to be scrapped last year because Nottingham Trent did not have enough funded student numbers.
Under the latest rescue package, the project company agreed to undertake no new financial commitment, keep running costs to a minimum and concentrate solely on fundraising. It was also forced drastically to cut the number of board members, effectively becoming a "shell" company responsible only for collecting university rent.
Roger King, vice chancellor of the University of Lincoln and Humberside, said: "Liquidation was never a serious option. There always had to be a rescue package."
Originally, the project company was to finance the next two phases of building work. But these will now be funded by the University of Lincolnshire and Humberside.
Phase two alone is expected to cost more than Pounds 26 million. Lincolnshire County Council, which contributed Pounds 10 million for the original project, has recently put in a further Pounds 2 million plus a loan of Pounds 2.95 million to be repaid by the end of December 2000.
Mark Spink, director of finances and resources at the council, said: "All this goes to show how incredibly difficult it is to start up a new university campus."
Meanwhile, both students and staff are complaining that they have suffered as a result of savings made to finance the new campus.