A Winchester mental health charity has gone into liquidation owing hundreds of thousands of pounds.

Trustees of the Winchester Alliance for Mental Health met behind closed doors to officially close the charity.

The organisation, which ran the Bird in Hand activity centre and the Byte internet caf, as well as Fareham-based training centre Skillploy, owes £350,000 to Winchester City Council alone.

Ann Craig, chairman of the charity's trustees, said: "The meeting was a financial and private meeting and the company is now in liquidation.

"It was a good meeting, people were pleased to hear that most of the service users will have cover, and we are hoping social services will be able to take over the Bird in Hand. That's sounding positive at the moment."

The crashed company is now in the hands of liquidator Harold Wilkes, of Wilkes and Associates based in West Tytherley.

Mrs Craig said the charity, which was set up in 1997, had identified a cash flow problem back in September this year.

Despite staff redundancies and cost-saving exercises, the charity's trustees had been unable to keep it afloat and have been in negotiations with Mr Wilkes since November.

"He advised the company would not be able to continue," Mrs Craig said. "A reduction in income without a reduction in costs was the reason.

"The trustees regret having to make this difficult decision and would like to give their sincere thanks and best wishes to service users."

Users of the services had feared they would be left out in the cold.

The Park Club in Sussex Street has extended its hours to cater for Bird in Hand users and may offer temporary employment to some staff until a permanent solution is found.

On Friday users were also able to have their Christmas lunch, paid for by social services, in Winchester's Guildhall.

Hampshire County Council social services manager Graham Collingridge said social services had reached an agreement with Solent MIND which it was hoped would take over the Bird In Hand in the new year.

"We have also purchased some of the assets from the Bird in Hand so we have protected the basic furniture and fittings," he said.