exclusive by business editor Trevor Sturgess

Bill Fearon, principal of K College, has quit over the financial crisis that has left the beleaguered institution £16m in the red.

Mr Fearon resigned last night at a crunch meeting of the governors. He will go at the end of the term.

Trade unionists at the college had been calling for his resignation.

In a note to staff seen by KentOnline, he told them: "Earlier in September when the deficit increased to £9.6m I tendered my resignation and agreed to leave at the end of the academic year in July, but since then the situation has worsened and it is now in the best interest of the College if I go sooner to allow a replacement Principal to manage the senior leader team in the long term.”

Mr Fearon added: "I am obviously very sorry to be leaving under the present circumstances, but as the manager with ultimate responsibility for all that the College does and achieves, it is appropriate.

"I have been extremely proud to have been a Principal at West Kent and K College, not least due to the commitment and achievements of the staff in the 10 years I have been in post.

"K College has done extremely well in its first two years in many respects, particularly with regard to student performance, and will go from strength to strength while the financial issues are resolved and beyond.

"I will be working ‘full on’ until the end of term with colleagues to ensure the New Year brings a stable position for a successful 2013."

Mr Fearon, a former businessman, is the second senior casualty of the college's financial turmoil. Terry Coleing, vice principal of finance and funding, left the job some time ago.

K College - formerly known as West Kent College - haemorrhaged cash after an ambitious takeover of South Kent College.

The financial mess led to 145 job losses and the planned closure of the Folkestone campus. It operates five sites - Tonbridge, Tunbridge Wells, Folkestone, Dover and Ashford.

Staff at K College went on strike yesterday

Members of United College Unions had been calling for his resignation, as well as that of chair of governors Laura Ellis, and staged a half-day strike ahead of the meeting.

In a statement, the college thanked Mr Fearon for his service over the past 10 years, but stopped short of expressing any regret at his departure.

It said he would leave after preparing a recovery plan, which aims to balance the books within two years.

The college had earlier said it had already made "significant staff savings" without the need for compulsory redundancies. Staff costs are 86% of the college budget.

Its underlying deficit was £11 million, but exceptional one-off costs had pushed this up to £16m.

Two projects have been put on hold - a new Ashford campus at Elwick Road, and a new technology centre at Brook Street, Tonbridge. Dover is said to have seen a rise in student numbers.

However, the Folkestone campus has been earmarked for closure. The college said it had been running at a substantial loss for some time and it would run courses from other locations in the town next year.

The multi-million pound hole in the campus coffers - a source said the college was effectively "bankrupt" - stems from inadequate financial controls during the college’s takeover of South Kent College.

It seems as though the full financial picture was not known when K College launched its bid. It is understood that South Kent College leaders voiced concerns about the viability of the bid at the time.

According to people familiar with the situation, auditors have combed through the books and found no evidence of fraud, just -in the words of one - "utter incompetence".

A K College spokesman said: "It is not financially viable to continue with all of the same staffing and accommodation arrangements that have existed in the past, and each of the college's six campuses across the five main towns it serves will have a unique curriculum offer with staffing, accommodation and resources that are fit for the students and employers purpose.

"We will seek to minimise compulsory redundancies across all areas of the college and provide redeployment opportunities wherever possible."