One of Shoreditch’s main arts venues has been rescued from closure after a truce was called with Tower Hamlets Council.

An £850,000 loan had been given by the council to help Rich Mix, in Bethnal Green Road, in 2003, but the venue clashed with the council when it failed to make repayments.

But in a deal struck by the two parties, the rest of the loan will be paid back to the council in return for an undisclosed grant promised years ago by Tower Hamlets.

Independents had accused mayor John Biggs of making a deal in secret to write-off the debt owed by Rich Mix back in the summer, but the council said the debt would be repaid.

A statement on Rich Mix’s website, almost identical to a statement released by Tower Hamlets Council, said: “Tower Hamlets Council and Rich Mix have resolved the dispute and have brought an end to the legal proceedings currently in the High Court. The resolution of these disputes secures Rich Mix’s future and will benefit all of its stakeholders, users and the residents of Tower Hamlets.

“As part of the resolution, Rich Mix has received S106 monies agreed by the council’s strategic development committee in August 2010 and has, in turn, agreed to repay the £850,000 loan given by the council to Rich Mix in 2003 and make a payment in respect of certain external costs.”

Rich Mix hosts around 650 arts events every year and receives £300,000 funding a year from the Arts Council.