Elstree Film and Television Studios saved more than 20 Christmas parties for over 5,000 people from cancellation, after its caterers pulled out without warning.

But it faces losing up to £40,000 in deposit money, which The Dining Set caterers had collected from 23 party-bookers, including One2One, Adecco, Tesco and Hertsmere Borough Council's leisure department in Borehamwood.

The studios was plunged into crisis, when its directors were told at 9am, on Friday November 2, that The Dining Set would cease trading at 5pm that day.

But by 5pm, the studios had taken over the running of an identical catering service, after directors Neville Reid and Julie Wicks spent the day negotiating with the 20-or-so Dining Set staff to remain.

It is understood that The Dining Set's parent company Availeon had spent a lot of money negotiating a large acquisition, but had learned on November 1 that its bankers had pulled out due to uncertainties in the market following the September 11 terrorist attacks.

Mr Reid said: "They had the plug pulled on them and the whole thing collapsed like a pack of cards.

"We had no warning whatsoever. It was not The Dining Set in trouble, it was the parent company."

He said quick and decisive action was needed to ensure a seamless transfer of the catering service, used daily by programme-makers at the studios, working on hits including Who Wants to be a Millionaire?, The Tweenies, and studios' staff.

Party-bookers have also been informed that their Las Vegas-style celebrations will continue exactly as planned.

However, the studios faces the loss of between £35,000 and £40,000, the value of 23 deposits paid into the bank account of The Dining Set or Availeon.

Mr Reid said: "We have probably lost those deposits completely."

But he hoped that, due to the number of functions at the studios, the Christmas parties would still produce a profit, although not as high as it would have been.

He said the deposits would be honoured by the studios, and party-bookers would not be asked to pay any more money.

At a meeting of the borough council's executive committee last Wednesday, where the temporary catering arrangements at the studios were approved, Councillor Morris Bright branded the pull-out, with the deposits at the beginning of the Christmas season, as "a dastardly thing to do".

According to Steven Law of receiver's Ensors Chartered Accountants, The Dining Set company is due to go into liquidation at a meeting next week.

He set the deposits' issue had not yet been investigated, but under general rules, unless specific arrangements had been made, the money would be lost and a company, like the studios, would have to make a claim for it during the liquidation process. A claim has already been made, according to Mr Reid.

A Tesco spokeswoman said: "We are glad our party is going to go ahead, because we would have to have booked somewhere else and we have paid a massive deposit."

A spokeswoman for Adecco, which has around 250 staff looking forward to its party, said: "To find another venue for such a large number of people would have been a problem."

Mr Reid said the present arrangement gave the studios time to consider its future options, which include continuing in-house or involving another franchise.

Shepperton Studios, in Middlesex, also took over its catering when The Dining Set ceased trading there.