Hartlepool United could be on the brink of going out of business after a local businessman walked away from a proposed takeover having looked into the club’s finances.

Chris Musgrave had said he was ready to save his home-town club but, after looking more closely at the finances involved to cover ongoing losses, he has pulled out.

It is understood Hartlepool, who were relegated from the Football League for the first time last year, are losing around £130,000-a-month and have until Jan 25 to pay a £200,000 VAT bill.

Should they default on that payment, they will either have to be put into administration by current owner John Blackledge, who is already owed around £1.8m, after previous owner Gary Coxhall abandoned the ailing North-East club last year.

Although there have been other interested parties, Musgrove was believed to be the only serious contender to save the club and there is a chance the business will go into liquidation if a new buyer cannot be found. Hartlepool play Chester in the National League on Tuesday night and have won just one game out of 13.

A statement from Musgrave read: “Some weeks ago, I was approached by Christopher Akers-Belcher, the leader of Hartlepool Council, to consider the prospect of buying Hartlepool United Football Club, so that it could be saved from financial ruin.