The Haymarket Theatre will close until next year

The theatre announced on Tuesday that it will close temporarily because of nearly £500,000 in debts, but plans to reopen in 2004.

A 60-day consultation process has begun with the unions to decide on a redundancy package.

The theatre says the level of payments will depend on its rescue bid, but should be more than the statutory minimum.

Tight budgets

Nine people will be kept on to run outreach workshops in schools, and five new posts will be created.

The Arts Council England says it will work with the theatre to ensure it will re-open.

The Arts Council's executive director for the East Midlands, Laura Dyer, said: "The arts council and city council are determined to work with the staff at the theatre to make sure the closure is not permanent," she said.

"This isn't a permanent closure, and it isn't a step they have taken lightly, but in the light of the financial difficulties, it is the best way forward.