ICSM Business Membership Group: fighting late and non-payment – News in Brief – two major charities enter administration while premiership rugby clubs are ‘on the brink’
By Harry Mottram: Two very large charities known to millions of people have entered administration just before Christmas. The Greater Manchester Centre for Voluntary Organisation entered administration on 27 November. Like many charities it relied on contracts with local and national authorities for much of its funding but in recent times has lost key contracts resulting in cash flow problems causing significant losses in the 2023/2024 fiscal year. It means 15 staff have been made redundant as Emma Mifsud and Charles Turner of Opus Restructuring were appointed joint administrators. Those chasing payment include Greater Manchester Combined Authority and Big Society Capital who have registered charges against the charity.
In a statement the charity said: “During the course of the Administration, the Administrators are committed to minimising disruption to the community where possible whilst engaged in talks with interested parties and as a result have retained some of the staff to assist in this process, whilst talks are on-going.”
Opus were called in after they said: “significant potential historic liabilities unexpectedly came to light", which ICSM’s Ian Carrotte said was ‘shorthand for running up debts and not paying invoices on time.’ The BBC reported: “Talks about moving some of the charity's services to new partners were ongoing, and it was hoped relevant staff would be able to keep their jobs. The administrators have also appointed independent HR consultants to help those who have been made redundant submit claims for compensation.”
Meanwhile another well-known charity Relate has hit financial problems. Originally the Marriage Guidance Council, the organisation dates to before the Second World War but in recent years was reliant on contracts from the Ministry of Work and Pensions. When those ended in 2022 cash flow problems began.
Philip Reynolds and Ian Corfield of FRP Advisory were appointed joint administrators and said that around 200 people remain employed at the charity, while approximately 80 employees have been made redundant – reported Insolvency Insider. The trade publications said: “The administrators also said that the central charity, as well as its network of 23 local charities, will continue to trade while the administrators consider restructuring options. However, the fate of Relate’s counselling service is less clear. National Westminster Bank has a registered charge against the charity. BDB Pitmans is assisting the charity.”
Ian Carrotte of ICSM said these were classic examples of being over reliant on large single contracts which when are ended leaves the charity high and dry.
Finally reports continue to circulate about the fragility of professional rugby union clubs when it comes to their finances and are widely thought to be 'on the brink' of collapse. Ian Carrotte said all the top flight clubs are technically insolvent with clubs like Worcester having already collapsed in a mountain of debt. He said: “Unlike football rugby teams play fewer games, have larger squads and have fewer supporters going through the turnstiles compared to football. They don’t have the cash flow as a result and rely on hospitality to boost their balance sheets and TV money is nowhere near to sports like football. My advice to suppliers – many who have been hit by the clubs that have gone bust already is to be very careful with credit terms. Being a fan of a team and a supplier can lead to a conflict of interest.”
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