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The theatre"s 11 employees and one contracted staff member were told of the closure at 9am yesterday.
The closure means no further shows, including those booked, will be performed at the venue.
The trust that runs the theatre said the model under which it worked was no longer financially viable.
However, a new model may rise from the rubble of the old.
Arts, Culture and Heritage Associate Minister Grant Robertson said yesterday he understood Creative New Zealand was meeting the Dunedin City Council as early as next week to consider the issue.
There is also a possibility of the theatre being part of a wider collaborative arts space at the former Sammy"s venue in Crawford St.
Fortune board of trustees chairwoman Haley van Leeuwen said it had been through an exhaustive process of reviews, and had closed the theatre because it was no longer financially viable.
"We have looked at many different avenues to avert closure, however, theatres and their audiences have changed over the years, and we must now take stock, with the goal of keeping the tradition of local professional theatre alive in Dunedin."
Ms van Leeuwen said the board had talked to staff and major funders, so while the closure might have come out of the blue for the public, it had not for insiders.
While some shows had attracted good crowds, it was not enough to keep the theatre going.
"The reality is that a lot of the shows we put on aren"t making enough money to be sustainable."
She said the trust had not considered a public appeal.
The trust would have been "misusing sponsors" and the public"s funds if we take that money when we knew for a fact the way we"re operating is not sustainable".
The trust would hold a general meeting this month where such matters would be discussed.
It had made a decision to close immediately because it still had money to pay staff, and look after creditors, so it could "close with dignity".
Ms van Leeuwen would not discuss staff payout details, but said staff would be paid everything they were entitled to.
The trust was working through a process to deal with people who had bought tickets to events that would no longer be held.
It would "hopefully" be able to refund them, but the general meeting would decide how the trust would be wound down.
Three shows due to be held over the next two weeks had found alternative venues.
Mayor Dave Cull said it was a sad day for live theatre, and for those who lost their jobs.
Live theatre was facing a challenge nationally and internationally, and models for running them would have to be collaborative.
The Fortune had made a submission during the long-term plan process about using Sammy"s as a collaborative arts space, and that could be a possible model for the future.
Mr Cull said a future use for the building would be considered.
Mr Robertson said Creative New Zealand had told him it was committed to supporting professional theatre in Dunedin.
"Obviously, they need to work with the city council and the theatre community in Dunedin to develop a new model that is sustainable, and I believe they are meeting the council as early as next week about it."
The Government already provided funding of $500,000 a year for the Fortune, and it would continue to fund professional theatre in Dunedin.
Arts Festival Dunedin director Nicholas McBryde said he had 12 performances booked over 10 days for the festival in September.
He had spoken to Ms van Leeuwen yesterday, and there were "no guarantees of anything at the moment".
"Everything is up in the air, which makes me awfully nervous."
The festival would work with "whoever we have to" to ensure the performances could be delivered.
Although the trust had closed its doors, he hoped the theatre could still be used.