A theatre investment company chaired by the former BBC and ITV boss Lord Grade had “completely lost the plot”, a judge was told, as the firm defended a High Court bid to prevent it being put into administration.

Michael Grade, former chairman of the BBC and former executive chairman of ITV, was forced to appeal in person to the judge on Wednesday after lawyers for Gate Ventures, a company he has chaired since 2017, quit at short notice over questions of whether they would be paid.

Gate Ventures, of which the Duchess of York was a director until December, has been locked in a bitter court room battle with investor and shareholder Zheng Youngxiong, who claims the company owes him £2.5 million.

Zheng has twice applied for an administration order against Gate Ventures, which has backed shows such as 42nd Street and Sunset Boulevard, and has had an e-commerce venture with Sarah Ferguson’s upmarket tea brand, Ginger & Moss.

In September an insolvency and companies court judge dismissed Zheng’s first administration application. This latest application is his second attempt.

Grade, appearing for Gate on Wednesday, requested the company be given one month to obtain sufficient investment from backers, and if unable to do so would then place themselves in members voluntary liquidation.

Zheng is alleging mismanagement of funds by the company.

Grade told the judge that the company had found itself caught in a battle following the breakdown of a relationship between Zheng, known as Quentin, and the former chairman of Gate Ventures, Hong Kong businessman Johnny Hon.

In a statement to the court, Grade said: “For the last 18 months the board at Gate has worked tirelessly to save Gate Ventures from liquidation or administration following the non-receipt of $10 million (£7.8million) that had been raised for the company by Mr Quentin Zheng and yet, despite numerous assurances by him and others on his behalf, not one penny of those monies has reached the company to this day.”

Gate had managed to raise money to fight off the previous administration order, he said, but a decision last week to allow an appeal by Zheng meant costs Gate had previously been awarded “were no longer payable to the company’s legal professionals”.

As a result, the company’s lawyers had “quit at very short notice”.

Grade had asked for an immediate adjournment as Gate Ventures had found new lawyers prepared to take the case on a contingency basis, and said he himself was “ill-equipped and incapable” of putting the case. The judge refused his application.

Grade said specialist counsel believed the company had an “excellent” case in respect of the $10 million claim against Zheng, and particulars of claim had recently been served. If Gate was not allowed one month grace, the “the alternative is administration by administrators recommended and funded by the applicant who undoubtedly owes Gate $10 million”, he said.

Matthew Parfitt, for Zheng, has told the judge his client is owed £2.5 million by Gate Ventures, which must be paid in April and the company does not currently have the funds to do so. It is argued that the company, which was founded by the songwriter Geoff Morrow may have some value, and that shareholders could reasonably expect to benefit from an administration.

Edward Davies, QC, representing another Gate Ventures shareholder, told the judge: “To use a theatrical analogy this company has completely lost the plot.”

It was in “disarray,” he said. “It can’t pay its lawyers.” It should be “put out of its misery” and control handed to administrators, he added.

The hearing is due to last until Friday when judgment will be given.