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Council may lose £70,000
THE WINDING up of Bridlington's debt-ridden Community Resource Centre means the town council could be left with a gaping £70,000 hole in its finances.
That is about the extent of the 60,000 balance of a loan made to Bridlington Community Partnership Ltd – the charity which ran the resource centre in Victoria Road – plus accrued interest and legal costs the council has incurred exploring how it might recoup its money through the courts.
At last Wednesday's council meeting members were told in a letter from liquidators Tenon Recovery of Hull, who moved in in June following a winding up order by HM Revenue and Customs, they would be classed as unsecured creditors.
That means they would share in whatever funds were left once secured creditors like the Inland Revenue and banks had been paid back.
That will almost certainly mean the town council, along with others, will only receive a proportion of the money it is owed, if anything at all.
It is understood the community centre buildings were valued at 670,000 and after secured creditors and other matters have been resolved the amount left in the unsecured creditors' pool would only be around 10,000.
However, a spokesman for Tenon said those figures were not accurate and the situation was more fluid.
"The liquidators will be issuing a report to the unsecured creditors within the next couple of weeks. Those unsecured creditors cannot expect to be paid in full," he said.
A letter explaining the council was among unsecured creditors dropped like a bombshell at last week's meeting and for newly elected mayor Coun Liam Dealtry it came as a shock.
After the meeting he said he was angry and concerned at the situation, but added: "We have to look forward and learn by past mistakes. Clearly mistakes were made.
"We had already sought legal advice as to how we could recover the money through the courts but have been advised it would be better to go along with the liquidators and see what they come up with rather than probably pour good money after bad."
It is a long running problem which he and most other members of the present council inherited.
"We need to try and resolve this problem but at the present time I am unsure how we can make up that shortfall," said Coun Dealtry.
The original 70,000 loan was made to Bridlington Community Partnership when it needed the money to meet demand and expand by buying 8 Victoria Road, next to the existing centre.
Only 10,000 was repaid and despite extensions to the repayment deadline and the threat of possible legal action, the money was not paid back.
The town council, which maintains it was perfectly entitled to make the loan, even considered buying number 8 itself, less the cost of the loan, and letting it out as a revenue earner.
The partnership blamed its problems on cash flow caused by expected funding which had not materialised.
It had hoped to be able to repay the council the loan and interest by selling the centre, but the sale was not completed before the liquidators moved in.
Town clerk Chris Smith said the situation would not affect the running and provision of services.
“We had not budgeted for that money coming back during the current year,” said Mr Smith.
The council will be setting its budget during next month.
“We will have to look at some careful management and some prudent housekeeping and creating a reasonable balance in the accounts for unforseen eventualities,” said Mr Smith.
He was unable to say if the debt would lead to increases in the next town council Council Tax rates.
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Weather for Bridlington
Thursday 24 May 2012
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Temperature: 9 C to 14 C
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