Tropfest short film festival has been cancelled following a "terrible and irresponsible mismanagement of funds".

The short film festival, which has run for 23 years, was due to take place on december 6 with the main event in Centenial Park and at venues around the counrty.

Tropfest founder and director, John Polson, said it was "devastating" to anounce that Tropfest would not be taking place as scheduled.

"In the past week or so, I have been made aware that the company contracted to raise the funding and administer the Tropfest event is unable to move forward for financial reasons," he said. 

"Despite a challenging sponsorship climate, Tropfest has done reasonably well in attracting support this year; however, to my great surprise, the management company has informed us that it is unable to proceed."

There were more than 450 entrants in this year's festival. Sixteen finalists had also been selected and Susan Sarandon had signed on the to head the jury.

Polson said it was the most difficult announcement in Tropfest's 23 year history.

"My heart goes out to this year’s 16 filmmaking finalists, to our incredible list of sponsors and partners, and of course to our loyal and beloved audience," he said.

"It is too early to tell what has actually happened here, although it is hard to avoid concluding there has been a terrible and irresponsible mismanagement of Tropfest funds. 

"I and others will be spending the coming weeks and months investigating what has transpired.

"In the meantime, I ask all of Tropfest’s many supporters to bear with us while we figure out how we can rebound from this disaster. 

"Now more than ever this unique Australian cultural event needs your patience and support."

Polson has taken legal action against the company managing the festival.

The festival started at a small cafe in Darlinghurst (Tropicana Cafe) in 1993 and has become one of the world's largest short film festivals.

Judges have included George Miller, Geoffrey Rush, Samuel L. Jackson, Russell Crowe, John Woo, Nicole Kidman and Cate Blanchett.

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