One of the many protections for businesses during the pandemic has been a ban on winding up action by creditors unless it can be shown that…
Administrators from PKF Francis Clark have reported that all creditors of a Devon-based rehabilitation charity, including former employees, have been paid in full following the successful sale of two properties.
Broadreach House in Plymouth provided residential, rehabilitation and community based treatment services for people with alcohol and drug dependency until the charity was forced to close due to financial difficulties.
Lucinda Coleman and Stephen Hobson, from our business recovery team, were appointed as administrators of Broadreach House in July 2019. The charity had been impacted by cuts in funding to local authorities and had debts of around £1.2 million.
It is rare for creditors to be paid in full when a company or charity goes into administration, so we are pleased to have achieved this outcome for creditors
Our team worked closely with the charity’s trustees, staff and local authorities to find alternative provision for 47 people who were receiving residential treatment at its Broadreach House and Longreach House facilities in Plymouth.
Lucinda said: “Broadreach House provided vital treatment and support services since 1982 but had seen a fall in council-funded placements due to cuts in government funding.
“Before our appointment as administrators, we were instructed by the trustees to carry out a strategic options review. Sadly we concluded Broadreach House was no longer financially viable and there was no alternative but to cease trading.
“However, the goodwill of staff and trustees meant that everyone pulled together to ensure a rapid but orderly transition to suitable alternative facilities for service users.”
The administrators have now concluded the sale of Longreach House and Broadreach House to two care home operators, with the latter sale completing during the coronavirus lockdown.
When companies and charities are experiencing financial difficulty, the sooner directors and trustees seek advice, the more options there are likely to be
Proceeds from the property sales, together with debts collected, have enabled the administrators to pay in full the charity’s creditors, including 62 former employees, suppliers and councils who had paid upfront for services.
Scott Bebbington, senior manager in PKF Francis Clark’s business recovery team, said: “It is rare for creditors to be paid in full when a company or charity goes into administration, so we are pleased to have achieved this outcome for creditors of Broadreach House. Fortunately, in this case the trustees sought professional advice and took action before the charity’s assets were exhausted.
“When companies and charities are experiencing financial difficulty, the sooner directors and trustees seek advice, the more options there are likely to be. This may include alternatives to a formal insolvency process, such as restructuring or negotiating a sale to enable the company to continue as a going concern.”
The business recovery team at PKF Francis Clark pride themselves on providing good quality advice with a focus on trying to rescue businesses and avoid formal insolvency wherever possible. More information can be found here.