The board of directors at the beleaguered Croydon Economic Development Company(CEDC) have resigned amid fears they could be held financially liable for the group’s demise.

A trio of council officers have taken over the task of winding-up the body within the next month after the Government pulled the plug on the grant used to fund it.

The council was forced to take control of the CEDC last November after it needed a £1m bailout to continue its work, despite receiving £8.5m a year of Government Local Economic Growth Initiative funding.

But Croydon’s ruling Conservative cabinet resolved to shut the body down in July, saving themselves £6m a year of future spending.

Projects supporting Croydon’s key retail and construction industries, and providing vital loans to small businesses, will continue until March 2011 before being axed if the council cannot find cash from elsewhere in its budget.

Simon Hoar, cabinet member for regeneration and economic development, said he was saddened by the resignations but respected the directors’ “honesty and openness”.

He said: ”It must have been a difficult decision for them and we appreciate that they have acted in the best interests of continuing economic development in the borough.

“We are grateful for the commitment they have shown and pleased that even in leaving they continue to recognise the value of an independent approach to this important area of work.

“The removal of LEGI grant, which is part of the government’s difficult task of reducing public sector spending, has unfortunately undermined the function of the company.”

A council spokesman said the authority and the former board members agreed using “business-oriented leaders” to liaise with Croydon’s companies rather then have the council take the lead was the right strategy for the future.

But an existing scheme employing District Centre Managers in business hubs across the borough looks set to be scrapped as it was also funded by LEGI.

Coun Hoar said DCMs could continue until March 2011 in a reduced form, but no funding had been found for beyond that date.