Event has learned the venue ran out of funds by late July, partly due to loss of sponsorship revenue after the Bloc Weekend festival was closed down on its first night due to dangerous overcrowding.
As a result, redundancies were made at the venue and all departments had their budgets cut.
LPG's appointed administrator Deloitte told Event there were no plans to close the venue in the immediate future.
Rob Harding at Deloitte said: "Unfortunately, London Pleasure Gardens has underperformed against its original business plan both in respect of festival activity and far fewer visitors than originally envisaged passing through the site and using its facilities. This has manifested itself in a cash flow shortfall in the business resulting in the directors having no option but to appoint administrators.
"We are now in discussions with all of the key stakeholders with a view to ensuring continuity of services on the site, whilst seeking purchasers for the business and assets, which include significant semi-permanent event structures."
The venue said in a statement: "It is with great sadness that London Pleasure Gardens Ltd has been placed into administration. We will issue more information within the next few days but would like to thank everyone who has supported us and our vision."
Newham Council is the main creditor of the project. It provided LPG with a £3.3 million commercial loan including a sum paid out to support the Last Mile Festival during the Olympics, which had its ticketed events cancelled and capacity reduced.
Newham Council said in a statement that it was "disappointing that the anticipated visitor numbers and revenue from recent planned events have not materialised."
Event also understands Newham was concerned about the commercial side of the venue before creative director Deborah Armstrong left the board. Communications seen by Event show the LPG board felt Armstrong should step down to ensure Newham's continued financial support of the project.
A spokesperson from Newham said: "We had been expressing our concerns to the board about the business side of things. We made that clear but we did not take any decisions for them."
The spokesperson continued: "The venue has been a victim of the success of TfL and Locog of getting people away from the Olympic venues quickly. We have been as supportive as we possibly could, not just financially but with our time and effort, but this is £3.3 million pounds of public money and we have a duty to safeguard that. We believe the venue has a viable long term future and we hope it will stay open, certainly during Games time."
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