By this time, Wallace had stepped aside from his role due to ill health, and after another caretaker spell for Steve Foley, Mick Mills was tasked with keeping Colchester in the Football League.
Aside from a four match unbeaten run in February and early March, Mills ultimately failed as the U's finished bottom of the entire Football League and relegated to the Conference.
Assistant manager Alan Ball left the club to join Stoke City and ahead of Christmas, Wallace stepped aside due to ill health and the onset of Parkinson's disease.
Chairman Jonathan Crisp brought in former Ipswich Town and England defender Mick Mills as new manager having recently been dismissed by Stoke City.
Despite having enough time to potentially improve their situation, six defeats in the final eight games of the season left Colchester bottom of the Fourth Division and so relegated to the Conference.