Unlikely Nottingham City Council will get any money back from failed Castle operator
It is increasingly unlikely that Nottingham City Council will get any money back from the trust which ran Nottingham Castle for just over a year before going bust. The Labour-run authority provided a loan of around £1.8 million to the Nottingham Castle Trust and had £821,000 worth of unpaid invoices outstanding.
The latest update from the liquidators of the castle trust says it is "uncertain" whether creditors like Nottingham City Council will get any money back. The St James Hotel on Rutland Street and LeftLion Magazine are among nearly 50 organisations that the Nottingham Castle Trust owed money to when it went into liquidation in November 2022.
The biggest creditor is Nottingham City Council, which provided a loan of £1.859 million to the trust and which had £821,000 worth of unpaid invoices outstanding. The authority has therefore said that it may have to write off loans and debts totalling £2.68 million.
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When a business goes into liquidation, a company is appointed to investigate that business' finances and see how many assets can be sold off. The cash achieved from selling these assets is then used to pay those owed money by the failed company.
Money is first given to 'preferential creditors' before the remainder is then given to 'unsecured creditors'. Nottingham City Council falls into the latter category, and will therefore have to share whatever is left after the £97,000 owed to past employees of the trust and HMRC has been paid.
Other major unsecured creditors include Arts Council England, who were owed £1 million by the Nottingham Castle Trust. The Nottingham Castle Trust owes more than £3.5 million in total to its unsecured creditors, but liquidators have not managed to pay out a penny to them since they started work in December 2022.
The liquidating company Interpath have previously estimated that the maximum amount they will ever be able to bring in from the Nottingham Castle Trust's assets is £404,310. Interpath says it will complete all the asset sales it can before distributing money to the Nottingham Castle Trust's creditors.
In their latest updated report, published on January 24, the liquidators say: "Based on current estimates, it is uncertain whether unsecured creditors will receive a dividend, with any distribution contingent on an expedited recovery of the remaining Gift Aid claim and debtors with minimal further costs being incurred."
Around £38,000 has been brought in so far from a Gift Aid claim with HMRC and liquidators saying they may be able to bring in further cash through this avenue, writing: "We continue to liaise with HMRC to understand whether any further amounts can be recovered as following a review of the books and records of the trust we understand certain donations totalling approximately £24,000 were not included in the original claim."
Around £20,000 has already been paid out to former employees of the trust. Nottingham Castle had been run since 1878 by Nottingham City Council until 2018, when it closed for a £31 million transformation.
Control was then handed over to the Nottingham Castle Trust in May 2019, with the venue reopening in the summer of 2021. After just over a year of operation, with issues including complaints over ticket prices, the trust went into liquidation in November 2022 and the council took back control - reopening the site in the summer of 2023. The site is now set to be run by a charitable development trust controlled by the city council.