McTear Williams & Wood Limited were contacted by the Trustees of a charity based in the East End of London. The charity had operated a community centre for the benefit of those living within the London Borough in which the centre was situated.
Industry overview
Challenges/situation
The community centre property was donated to the charity by the Council in 1984 and at that time a deed was created to secure the financing of the property and restricted use of the building to things that directly benefited the local community. Just prior to contacting McTear Williams & Wood the property had been refurbished but the costs overran due to delays and the charity needed to borrow £850k to pay its creditors.
Risks
The charity had a complex governance structure and there were significant disagreements which escalated to litigation between members and led to the Bank and the council becoming concerned about their positions.
The charity was unable to pay the solicitors’ fees, the builders’ costs and the first instalment of the bank loan. Andrew McTear and Chris Williams of McTear Williams & Wood were appointed as joint administrators.
The solution
In order to rescue the charity as a going concern the Administrators had multiple meetings with the council which agreed to loan the charity £200k in order to find a compromise with creditors. The Bank was also fully supportive of a rescue package. As administrators we kept he community centre open during the administration period.
Summary
As part of the rescue package the Administrators were able to appoint new trustees and assist with putting a business plan in place. The administration ended and the charity was returned back to the control of the newly appointed trustees.
The charity is still operating and running the community centre for the benefit of the local community and it has expanded to a second community centre.
