The Belltable Arts Centre in Limerick city, which has been in business for over 30 years, has gone into liquidation.
There are concerns the centre will not be open when Limerick becomes the first national City of Culture in 2014.
It is understood the decision of the board to liquidate the company came after talks to meet a debt over a major refurbishment failed.
The centre has been a vibrant city theatre and art gallery in the heart of Limerick for 32 years.
It underwent a major refurbishment two years ago, estimated to have cost almost €1m, and included the installation of a digital cinema.
An overrun, estimated to be around €300,000, on the refurbishment costs is one of the reasons the board decided to liquidate.
The closure of the theatre and arts centre has been a blow to the arts community in Limerick, given its strong brand and reputation for performance in the past.
Former director of the Belltable and playwrite Mary Coll said its demise has left many people saddened.
The building where the Belltable is housed is owned by Limerick City Council, a resource worth around €3m to the city.