Traders owed thousands after collapse of Nottingham Castle Trust

Nottingham Castle Trust owed significant sums of money to local traders and suppliers when it collapsed last November, Museums Journal can report.

The trust ordered retail stock for its gift shop worth between £5,000-£6,000 in the run-up to the Christmas period. Following its collapse, many small local traders were left unpaid and unable to reclaim their stock, which was liquidated along with the trust’s other assets.

Traders are questioning why the orders were authorised just weeks before the trust closed on 20 November, at a time when they say it should have been known that the trust was in financial difficulty.

While some have been able to recover their stock from the liquidator, Interpath Advisory, others did not have a contractual arrangement to retain title over the products they supplied and these were sold off as assets of the trust.

IT equipment, furniture and stock from Nottingham Castle Services Limited, the company that ran the site’s commercial operations, was sold as a single lot to Nottingham City Council, which owns the heritage site, on 22 December. Assets from Nottingham Castle Trust, the charity that operated the site, were purchased by the council as a separate lot on the same date.

The assets of the trust raised approximately £350,000 in the liquidation sale, of which just under £150,000 will be paid to Interpath Advisory. The remainder will be used to pay off the trust’s debts.

Local maker Katherine Wilson supplied £436 worth of handmade glass products to the trust on 21 October after receiving a purchase order on 12 October. As an unsecured creditor, she thinks it is unlikely that she will be able to recover the debt as banks and other secured and preferential creditors are first in line for repayment.

“As soon as the liquidation process starts you have very little rights – I’m absolutely at the bottom of the pile,” Wilson told Museums Journal. “This was my work, my creation, my product. Someone somewhere has got money for it and it isn’t me. I’ve tightened my terms and conditions to make sure I’m never in this situation again.”

Wilson believes the decision not to return unsecured stock in good faith, or even to give traders the opportunity to buy back their stock, is “incredibly shortsighted”, given the council’s plans to reopen the site with a new retail and catering offer as soon as possible.

“I was very surprised about the decision to sell off everything as a single lot – there should have been an option for suppliers to buy back their stock,” she said.

Wilson said the experience has damaged trust among local traders and suppliers. “I’m by no means the only one; many others are in the same boat,” she said.

Museums Journal understands that the decision was taken to sell the assets as a single lot because the costs of facilitating multiple smaller sales would have outweighed the cost of entering into a contract with a single party.

The trust also owed thousands to suppliers that provided services in the months before its closure, including around £24,000 to one company that ran a 12-day event at the trust.

In addition, 15 workers on zero hours contracts were not paid for their final month’s work. Museums Journal understands that efforts were made to ensure the workers would be paid alongside other staff when the trust announced insolvency, but that this was overruled internally.

In the months before its closure the trust increasingly relied on external companies and consultants to provide services as internal roles went unfilled due to high staff turnover.

As standard practice, the liquidators will submit a report to the Insolvency Service on the conduct of the directors during the period before the trust’s collapse, including whether the companies were trading while insolvent.

As Museums Journal reported previously, the trust first contacted Interpath Advisory for advice in February 2022 before receiving a supplemental grant of £200,000 from Arts Council England.

Over the course of the 2022, Nottingham City Council also provided loans to the trust, allowed deferred payments and helped it to secure funding from other organisations in an effort to keep it afloat.

The council ceased funding the trust when it concluded there was no prospect of a financial return. The organisation's trustees and directors resolved that the trust was insolvent on 18 November and announced its closure on 20 November.

There is no suggestion that the trust was trading while insolvent.