The insolvency of a school is not as rare as you would think.
Schools often face problems from falling pupil numbers or issues with Ofsted (Office for Standards in Education) who can very quickly remove a school’s ability to trade.
The common problem issues for schools with financial problems are:
- They will have high staff numbers of highly skilled and paid staff and the redundancy costs of trying to restructure the school can be prohibitive.
- Pupils may have been paying school fees in advance ( so the school owes parents money).
- The disruption of ending a term early and having all of the pupils moved to other schools plus the liability for breach of contract to the parents.
- The confidentiality of school records.
The other issues that are particular to schools are that they may have been run as charities or companies by Guarantee which both present their own problems that we are used to dealing with.
It is better to call in someone qualified like us at an early stage to understand the schools realistic financial options and to help come up with a contingency plan if it does all go wrong.
The options may be:
- To trade out and refinance including agree a time to pay.
- A Company Voluntary Arrangement.
- Closure and liquidation.
- Administration and some kind of rescue of the school.
We have dealt with a number of insolvent schools (and insolvency by definition can mean being unable to pay your debts as they fall due) and have the experience and knowledge to be able to help.
We can advise the school trustees or directors on what they should do to reduce the risk to them of wrongful trading and what can and cannot be done.