Despite the success of last year's Noosa Film Festival in terms of profile and programming, director Luke Davis has admitted that unpaid debts and lack of sponsorship means there is unlikely to be a sequel.

Davis confirmed the event has about A$300,000 in outstanding bills due to a sponsor withdrawing at short notice. And although Davis is meeting with potential new sponsors about a rescue package, creditors are already threatening to start liquidation proceedings.

Davis also noted that Khyentse Norbu, director of last year's winning film The Cup, issued a statement at the Sundance Film Festival saying he has no intention of taking legal action to retrieve the unpaid A$50,000 prize money.

"Funding for the 2000 event is almost impossible to obtain,' Davis said. 'We have been unable to get government support and major corporate sponsorship in an Olympic year is hard to access.'

Davis said he questioned whether Australia is big enough to maintain another competitive festival - particularly one held at a tourist destination outside the major capital cities. Last year's budget of A$1.8m was substantially funded by Davis' brother Cameron, but this year only A$500,000 has been raised.