Herefordshire Council in talks over taking on the liabilities of Hereford Futures (From Hereford Times)
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Herefordshire Council in talks over taking on the liabilities of Hereford Futures
TALKS are underway between Herefordshire Council and the Homes and Communities Agency (HCA) over the extent to which the council can take on the liabilities of Hereford Futures Ltd (HFL).
Confirmation of the talks comes in papers prepared for a meeting of the council’s overview and scrutiny committee on Monday (March 10).
The report of the HFL directors’ for the year ending March 31 2013 states that the company has net liabilities as at that date.
In April last year the company was told it would cease its operations, which would be transferred to Herefordshire Council, and ultimately would be wound up.
However, HFL did receive confirmation from the council that “sufficient funding” would be made available to the company to enable it to fulfil its obligations and to pay liabilities as they fell due.
The scrutiny papers confirm that on May 30 last year the council’s then Chief Finance Officer (CFO) wrote to the directors of HFL to confirm the council’s funding commitment to the company.
In this letter it was recorded that the council had requested HFL to continue to trade in accordance with agreed business plan priorities and then wind down.
In consideration of HFL directors agreeing to this request, it was also confirmed that the council would provide funding of a maximum value of £695k in a combination of revenue and capital - by way of non-repayable grant - during the financial years 2013-14 and 2014-15.
The letter went on to record that HFL was intending to operate in a financial envelope of £485,950 and that £695,000 was to be the maximum sum that would be made available to HFL to enable the directors
to “discharge in full the liabilities of the company as they fall due” and repay all remaining liabilities together with costs and expenses associated with the wind down.
An appendix to the scrutiny report shows council funding of £355,322 in 2013-14; and £130,628 in 2014-15 and rental income contributions estimated at £95,600 for 2013-14: a total of £581,550.
The difference between this and the maximum sum of £695k referred to in the then CFO’s letter is £113,450 that the council says relates to an “available funding resource” that can be accessed following agreement to a “funded business case” submission.
Presently, council officers are in talks with the HCA and HFL about the extent to which the council may take on any HFL liabilities in the future.
However, the report confirms that, other than the May 2013 letter from the then CFO, no assurances or commitments have been given by council officers.
As such, the issue will be reported to the council’s cabinet for a decision in the coming months.
The council concedes that it is “probably reasonable to infer” from the directors’ report for 2013 that, at the date the report was approved by the HFL Board, the directors considered the council’s financial commitments in the May 2013 letter to be sufficient to cover the company’s then known liabilities.
Council officers have “not subsequently been advised differently” the report says.
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