Following the closing of BCAT (Burngreave Community Action Trust) on November 10th (see BCAT Folds in Issue 67), two meetings were held on December 6th 2006 at the offices of Abbey Taylor Ltd, insolvency practitioners. The first was an Extraordinary General Meeting for BCAT members, and the second was a creditors’ meeting.
Could not possibly continue
At the members’ meeting, which the Messenger did not attend, the resolution to voluntarily wind up the company was passed by the 13 members present, and the liquidator – Tracy Ann Taylor – was formally appointed. The members were given a copy of the “Estimated Statement of Affairs as at 6th December 2006”, which showed that BCAT’s assets, after employees’ immediate wages had been paid, totalled about £45,000 – mostly cash in the bank. Estimated liabilities (money owed by BCAT), however, totalled more than £275,000. It was clear that the Trust was insolvent and could not possibly have continued to trade.
Ms Taylor explained that the liabilities included £165,726 Objective One “clawback” which, although owed to Government Office under the terms of the funding agreement because BCAT had stopped trading, in fact related to funds that had been legitimately spent. The remaining £110,000 consisted of:
£86,808 belonging to the Burngreave New Deal for Communities Small Grants Fund, which had been overpaid to BCAT in 2005.
at least £10,500 in Employees’ statutory redundancy entitlements
at least £3,600 in PAYE owed to HM Revenue and Customs
at least £9,000 owed to trade and expense creditors
Creditors unlikely to be paid
The Messenger attended the creditors’ meeting which was held immediately after the members’ meeting. Two other creditors were represented – a local business and New Deal. At that meeting it was made clear that apart from the employees, whose redundancy payments will be covered by the Government-funded Redundancy Payments Service, it is extremely unlikely that any of the other creditors will get back any of what they are owed. Apparently BCAT’s affairs are complex, due to the number of small projects they managed and an ongoing employment dispute, so the costs of the liquidation are likely to absorb most of the assets.
The creditors and the two trustees present were given summarised draft accounts for the year ending 31st March 2006, prepared for the meeting by BCAT’s accountants, Wingfield Slater. The accounts for this period are now unlikely ever to be completed, let alone audited or published; however they do indicate that BCAT was already effectively insolvent on March 31st 2006.
Events leading to liquidation
Abbey Taylor had prepared a “Company History of BCAT” which gave a brief history of BCAT and BCAF since 1997, and described the events leading up to the liquidation:
The BCAT board of Trustees have struggled over several years with various financial issues. Several staffing issues consumed the Trust’s reserves and an overpayment from New Deal finally led to the Trust being in danger of trading without sufficient funds.
Subsequently the project manager contacted the Trust accountants, who referred him to Tracy Ann Taylor, Licensed Insolvency Practitioner of Abbey Taylor Ltd on 24 January  to discuss the Trust’s options and the possibility of placing the Trust into creditors voluntary liquidation. However, after that meeting the company received further grants and as such continued to trade.
The grants were suspended and therefore the Trust was not able to continue, and as such the project manager again met with Tracy Ann Taylor of Abbey Taylor Ltd on 7 November 2006 to assist in putting the Trust into creditors’ voluntary liquidation.
When questioned about events leading up to the meeting with Abbey Taylor on January 24th, Ms Taylor confirmed that it was the Trust's accountants who had first raised the alarm about the possibility of insolvency when the core funding came to an end in March 06. The accountants were particularly concerned that the ongoing employment tribunal case relating to the suspended director (who was still receiving his full salary) showed no sign of being resolved and that there would no longer be any funds available to cover this cost.
Ms Taylor said that at the meeting on January 24th she had asked for financial information from the Trust’s 2005 management accounts so that she could establish the actual current financial position. She confirmed that she never received this information. However, she did receive a phone call from the BCAT office in March 2006 saying that their funding had been renewed, and everything was therefore OK. She had then closed the file, and did not open it again until she was contacted in October 2006.
Ms Taylor confirmed that the Chair of the Trustees (who has since resigned) had attended the January 24th meeting with the insolvency practitioners. The Trustees present told the creditors that they did not know about either this meeting, or the accountants' concerns that had led to it, until very recently.
by Annie Blindell