Karate England, the governing body of the sport, was in chaos last night after a statement posted on its website stated that the organisation had stopped trading and that the liquidator had been called in.

But when contacted by The Times, Victor Charles, the acting president of the board, said that the statement was premature and that Karate England remained a going concern.

Karate England was created from an amalgamation of three organisations in November 2005. It received more than £400,000 of public money from Sport England but is labouring under debts understood to be about £160,000. At an extraordinary general meeting in Burton upon Trent last month there were angry accusations of extravagance and mismanagement.

Charles’s contention that Karate England could be rescued was disputed by a key karate insider, but by last night a further statement had been posted on the Karate England website saying that “Sport England has come forward with a positive intention to help. The board will be working with Sport England to explore all options available to them in the next few days.”

Sport England, the quango that suspended funding to Karate England in August because of what it described as “financial mismanagement and governance issues”, told The Times that it was seeking urgent clarification as to the status of the governing body before deciding how to proceed.

There were gasps of astonishment at the EGM last month when it was claimed that Karate England had spent “almost £1 million in 11 months” before running into trouble with creditors. It was revealed by The Times last week that a number of former staff members have not been paid their salaries and that some are withholding IT equipment as bargaining chips.

At the EGM, criticism was levelled at Nick Halafihi, the former chief executive, who, with the approval of the board, spent thousands converting the garage of his home into an office and was paid his three-year car allowance of £15,000 up front. There were also calls for the resignation of the board.

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