Medialab, the company which publishes the Metro newspaper in Sussex, has gone bust.

All 20 staff at the firm's offices in Western Road, Brighton, have been made redundant after the firm went into voluntary liquidation earlier this week.

Medialab's founder and managing director, Leonard Stall, who is also chairman of the Sussex branch of the Institute of Directors, was said to be "heartbroken".

It is not clear what will happen to the Metro contract, or the various other titles the company publishes - including Sussex Enterprise's Business Edge.

It is understood a "phoenix"

company - called Fruit Design - will be launched in a bid to renegotiate existing deals and save some of the firm's contracts.

When Medialab was chosen to publish Metro on the South Coast in September last year it was trumpeted as the biggest contract in the company's history.

Mr Stall confidently predicted that Metro would "take Brighton by storm".

He said: "It's a perfect fit with our young, urban audience. The city will love it."

But some questioned the logic of the contract which burdened Medialab with Metro's printing and distribution costs in return for a share of the advertising revenue.

Accounting firm Chantrey Vellacott, in Boundary Road, Hove, is handling the company's affairs. A meeting with creditors is due to take place in a fortnight.

Steve Cotterill, editor of Business Edge, said: "This has been very tough for Leonard.

He's a nice guy who has a lot of loyalty here. It's a case of wait and see now."

The Metro franchise is owned by Daily Mail owner Associated Newspapers, which launched the title in London in 1999. It now distributes a million copies a day in 15 cities.

Its arrival on the South Coast was seen as a direct challenge to this paper's sister title Argus Lite which was launched six months earlier.