Collapsed Culture Trust unlikely to repay £4.25m debt

Coventry City of Culture Trust entered administration in February

Coventry City of Culture Trust is unlikely to be able to repay £4.25m it owes in debts after entering administration, a report says.

The trust collapsed in February and a report from administrators suggests little over £500,000 is expected to be recouped from its assets.

Creditors unlikely to see a penny back include the city council, which agreed to a £1m loan in October.

Administrators have started investigating the trust's collapse and found Covid-19 "adversely impacted" the operation.

The start of the year-long programme was delayed due to the coronavirus pandemic

The majority of the money released from the trust's assets will be spent on administration costs, paying a £100,000 debt to HMRC and a further £24,000 to former employees.

However the report said creditors owed more than £1m are unlikely to be paid at all.

As well as the £1m to the council, the trust also owed £1.5m to arts organisation Assembly Festival and £505,000 to West Midlands Police.

Other loans of tens of thousands of pounds were also paid by Culture Coventry, The Albany Theatre and Coventry University.

The city council said it would do all it could to ensure it got as much of the money back as possible and West Midlands Police said it should be "top of the list" to receive funds "as a publicly funded body".

William Burdett-Couts, the artistic director of Assembly Festival, said the report was "not a surprise".

He has previously said his organisation's future was at risk due to the unpaid debt and has called for compensation from the council.

Analysis

By Simon Gilbert

BBC CWR political reporter

The financial impact of the Coventry City of Culture Trust has now been laid out in black and white.

But what is harder to calculate is the impact on the city’s reputation – and the morale of its cultural institutions.

The focus locally, and nationally, will now shift to exactly how a trust responsible for tens of millions of pounds worth of public money went bust.

Those seeking answers will welcome the commitment of the administrators to engage “forensic” investigators to look into the Trust’s finances.

What will be less welcome is the news that those investigations are unlikely to conclude any time soon.

A three-year legacy programme will no longer go ahead after the Trust collapsed

There have been a number of calls for Coventry City of Culture Trust to be investigated for its handling of public money.

The National Audit Office has confirmed it was looking at its finances, as has the Charity Commission.

The council has held two scrutiny meetings to examine the collapse, however on both occasions it was shunned by all but one of the trust's board members.

The report by administrators, published on 25 April, shed some light on the trust's troubles and highlighted the coronavirus pandemic.

It said extra safety measures increased the cost of events, which fewer people turned up to, and the trust also struggled as its funders came under increased pressure too.

Investigations would be a "lengthy and time consuming process", it said.

Administrators have also appointed a forensic team to help investigate how the trust used the £1m loan it received from the council last year.