Introduction

Effective financial management and early intervention are crucial in preventing a charity facing financial difficulty, escalating beyond control.

This case study involves a rehabilitation facility that provided safe and secure accommodation and support for vulnerable people through their recovery journey in the Midlands. The charity faced severe financial difficulties and was forced to make rapid decisions, resulting in immediate redundancies and unavoidable liquidation. While the situation unfolded quickly, discussions about potential changes had already been taking place with the Council. A great number of potential solutions and avenues were explored before the involvement of McTear Williams & Wood.

The challenges they faced

The charity’s primary challenge was an acute financial crisis that escalated rapidly. They contacted us for initial advice, but delayed taking immediate action in order to explore other options. By the time they re-engaged with us, the situation had deteriorated, leaving them with no choice but to make all staff redundant and unable to meet salary obligations. Our dedicated employment team were able to help them and their team navigate the challenges that came with this to ensure everyone knew their rights and where to turn to for advice and support.

While the urgency of the situation limited the charity’s ability to implement long-term plans, efforts were made to liaise with councils to find suitable charities to take over services and secure housing arrangements for approximately 40 individuals who were in rehabilitation accommodation prior to liquidation.

The Solution

Due to the urgency of the financial crisis, the charity unfortunately found itself with few options. Specifically:

Immediate redundancies: All staff had to be made redundant within a couple of weeks.

Liquidation: Insolvent liquidation was unavoidable, and the process had to be initiated quickly.

Council referral: We advised the charity to refer the individuals receiving services to the local council, as the council would have to take responsibility for their care.

The Result

• Rapid liquidation: Liquidation was unavoidable and had to be executed quickly due to the severity of the financial crisis.
• Council responsibility: The responsibility for supporting individuals receiving rehabilitation services was transferred to the local council.
• Limited support mechanisms: Due to the rapid deterioration of the situation, the ability to put robust support mechanisms in place was severely limited.