ARRC Ltd the company that managed ARRCC, (the arts health and well-being charity), was put into liquidation on Monday April 16 as foreshadowed in Rye News last week. The deficiency is now estimated by Compass Financial Recovery & Insolvency Limited (“Compass”) at £292,000, . Principal creditors are HM Revenue and Customs for PAYE £95,000 and trade and expense creditors £74,000. 31 employees are owed £13,000, the Redundancy Payments Office is owed £38,00, and the banks are owed £20,000. In addition, loans to the company from two trustee directors total £42,000.
Following last week’s report in Rye News, an East Sussex County Council spokesman said: “This building has been leased by the council to ARRCC Ltd, a registered charity, on a peppercorn rent since 2014, with the company running it as a creative arts centre and receiving rental income from resident artists. “We were in the process of agreeing a new lease, to replace the existing one due to expire on April 5, but were made aware they were experiencing significant financial difficulties. The directors had appointed a recovery agent to review their status and had decided to place the company in liquidation.
“As a temporary measure, we have agreed to take over management of the complex to enable it to remain operational for an initial transition period of three months, while we seek to set up new management arrangements for its long-term future.
“The council has separately been commissioning ARRCC Ltd to provide day care and home care services to around 40 adult social care clients – older people and adults with disabilities.
“We are urgently working with all of these clients to provide alternative services on a temporary basis to replace those provided by ARRCC, and to find suitable long-term solutions to cater for their care needs. It’s regrettable that ARRCC Ltd, to which the council has provided considerable financial support for a number of years, finds itself in this situation.
“Our priorities now are to ensure that we are able to manage the transition for our adult social care clients as smoothly and as sensitively as possible and to agree arrangements affecting the future of the building and its resident artists.
“ARRCC has not seen any cuts to the funding it receives from the council.”
When challenged by Rye News on this last assertion, further clarification was supplied by the ESCC spokesman as follows: “In recent years we have seen a switch towards adult social care clients being given a personal budget rather than being directly funded by the council. This is in accordance with national Government policy, aimed at giving clients more choice over the care they receive – they are allocated a budget for their care needs and choose the kind of service they wish to receive. If ARRCC has been receiving less clients than it used to, that is down to clients choosing an alternative provider, and is not the result of any cuts in the funding from the county council.”
Further clarification was supplied by a spokesman from Compass:
“Following a letter of demand for over £95,000 from its largest creditor, HMRC, ARRC Limited (“ARRC”) contacted Compass on February 23 2018 to determine the options that were available. The board had hoped to be able to rescue ARRC and had considered a Company Voluntary Arrangement (CVA) at a meeting of Trustees attended by Compass held in early March. This was discounted very soon after following the sudden death of the newly appointed CEO who had agreed to review operations to identify potential savings that would have been necessary for a CVA to be serious and viable. Shortly after his death notification was received that the lease on the Creative Centre at Rye would not be renewed.
It became clear that there was insufficient time to find a replacement CEO and alternative premises which would have been needed for a CVA to be a possibility and the decision was therefore taken by the board to place the company into voluntary liquidation, thereby closing the trading premises in Rye and Folkestone and the service offered in Bexhill.
The overall deficit in the accounts to 31 March 2017 was £162,487. The director’s estimated statement of affairs identifies a total deficiency of £292,075. After allowing for the extraordinary liabilities that have arisen solely because of the liquidation (employee claims for payment in lieu of notice and redundancy) and the write down in value of assets as the company is no longer a going concern, the theoretical trading loss from 1 April 2017 to the date of liquidation is £74,874.
At present it appears unlikely that there will be a return to unsecured creditors.
The liquidator has a statutory duty to review a company’s books and records to determine the reasons for failure and as part of this process identify any potential claims available that will increase realisations for the benefit of the company.
Creditors can contact the liquidator’s office on 01892 530600.
We recommend that companies suffering ongoing financial problems contacts an Insolvency Practitioner at an early stage as the sooner contact is made, the greater the chance that it can make a turnaround and avoid liquidation.”
Rye News has been informed by Irna Mortlock, the former media, marketing and volunteer co-ordinator for ARRCC and now a director of Encompass (Rye) Ltd., that she is hoping to set up a similar service for clients to that undertaken by ARRCC. She writes: “Having worked with our members for the past 10 years, I feel that I would like to keep us all in touch with each other, such close friendships have been formed over the 18 years that ARRCC has been in operation, it would be very sad for people to lose touch.
“I have formed my own company Encompass Care, and will be hiring local village halls on a weekly basis, to provide some respite for the Carers/Partners, as well as a social gathering, with a home cooked lunch for the members. If this works well, I hope that the new leaseholders at the Rye Creative Centre and ESCC Commissioners will look on ENCOMPASS Care favourably and offer us premises. This would then enable us to apply for charity status and for funding.”
Irna Mortlock gives further information about the Folkestone based branch of ARRCC. “Trish Bishop from ARRCC Folkestone will be opening up at the same premises in Folkestone, but as a brand new Company BOLTHOLE CARE. Her landlords have agreed to a short term lease as have KCC for client’s contracts.”
Efforts by our reporter to contact Trish Bishop at ARRCC Folkestone have been met with the response that “ARRCC is in liquidation and I am sorry that I can’t talk to you now”
Photos: Rye News library