Coventry City of Culture Trust creditors ‘unlikely to be paid’

Coventry City of Culture Trust is unlikely to be able to pay back any of its debts to private creditors, including a handful of arts organisations, according to a report released by its administrators.

The administrators have estimated the trust’s total debt at just under £4.25m and have said only the trust’s former employees are likely to be paid their outstanding losses in full.

Former employees made redundant as part of administration proceedings are collectively owed around £24,000 and will be paid first as preferential creditors, followed by HMRC, which is not expected to recover all of an outstanding £100,000.

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Documents from the administrators confirm around £500,000 is expected to be realised from the trust’s assets, currently valued at £2.8m.

The figure includes around £170,000 from made from an auction of the entire contents of The Reel Store, the UK’s first permanent immersive art gallery which Coventry City of Culture Trust owned.

But the majority of funds recovered through the charity’s existing assets will go towards the costs of administration, leaving over 35 creditors currently not expected to recover anything.

The administrators' report says the only way these groups will receive any money is if “the trust recovers significantly more assets than predicted and no other creditors come forward”.

Out of pocket

Among the trust’s creditors is Culture Coventry, owners of Coventry’s Herbert Art Gallery, which is owed almost £100,000.

Albany Theatre is owed £30,000. The theatre’s chair David Meredith told The Times the loss will be “damaging”.

“Our team – trustees, staff and volunteers –  are very concerned that the damage to the city’s reputation will undermine our own credibility. And they say that isn’t fair,” Meredith added.

Assembly Festival is owed £1.48m, the most of any private creditor. Earlier this year, the operator, which provides around 20% of Edinburgh Fringe Festival’s shows, said it is future is 'at risk' following the trust’s collapse.

Artistic Director William Burdett-Coutts commented that the report’s findings are “not a surprise”.

Burdett-Coutts added the company will be using a bank loan to “get through the summer” but could face a “really tricky predicament” next year.

Several public sector organisations also have outstanding debts, including West Midlands Police, which is owed over £500,000.

Director of Commercial Services at West Midlands Police Peter Gillet told the Coventry Telegraph: “As a publicly funded body, our position is that we should be at the top of the list of organisations to receive any money raised from the trust’s assets by administrator,” 

“We are working closely with the trust’s administrators and continue to push for any money we are owed as part of this well-established legal process. We will explore all options available to us.”

Council leader stands by loan

The administrator’s report confirms Coventry City Council is owed around £1.6m, the most of any creditor.

Council leader George Duggins recently said he believes it was the right decision to grant the trust an additional £1m last year, despite records indicating the charity was already aware of its loss making at the time.

“At the moment of the decision, I believe it was the right decision and I still do. We believe we took the right decision at the time. It's taxpayers' money and we do take that very very seriously,” he told the Local Democracy Reporting Service.

Duggins added that he believes the trust “misjudged the amounts of money that was going to be coming in in respect of the legacy”.

He supports calls for a public inquiry but rejected claims from the opposition local conservatives that the grant was given out without effective due diligence.

“Let's look at it from another point of view, if the City of Culture Trust had just gone 'bang' and we hadn't tried to do anything about it, fingers would have pointed at us anyway,” he added.

In the same interview, he added the council will put together a package to support future legacy events, although how that will be run is still undetermined.

“The idea that somehow the City of Culture year is a failure because of this is palpable nonsense,” he added.

“I would say in respect to legacy some of the regenerational projects are already legacy in their own rights, and they will be standing for a very long time.”