With three months of the Guild Hall standing empty as a venue, we look at the situation at the city’s iconic venue.Advertisement
The administrator Beverley Budsworth released a revealing report into the state of the finances of Preston Guild Hall Ltd.
Simon Rigby, who took on the venue for £1 in 2014 from Preston City Council, went from hero to pantomime villain during the events in May and June.
Here’s some questions that sprung into our minds as we read through the administrators report.
The lease, which ran for 999 years between Simon Rigby and Preston City Council, initially had a ‘book value’ of £6.6m for the whole venue, arcade and more. But it was revalued at £5.5m shortly before the transer to Mr Rigby in 2014. We can see no reference to the worth of the lease after this point in the administrators report.
Well, as much as someone is prepared to pay for it. We’ll never know as the city council enacted a forfeiture which means the administrator was not able to use the lease as one of the main assets to dissolve to get those owed money by the Guild Hall’s administration some money back.
He set up subsidary companies of the Guild Hall, called ‘special purpose vehicles’, and then let individual parts of the Guild Hall to these companies – 11 in total. However, the administrator highlights a number of the Guild Hall units were then sub-let, which appears to breach the terms of the original lease. There were two directors, Mr Rigby and from 2016 a Thomas Adam Flack.
February 2016 marked a change at the top of Simon Rigby’s top team. Michael Jonathan Darch resigned as a diector and in came Thomas Adam Flack. His LinkedIn profile shows he has been one of Mr Rigby’s right-hand men for nearly a decade, and is the Finance Director of Simon Rigby’s parent firm The Rigby Organisation. In February 2016, the Guild Hall had still not returned a profit – despite Mr Rigby having eyed one after two years when he first took on the lease.
There was lots of money coming in, £6.2million in 2018 to be precise, but the trouble was costs. Mr Rigby could not keep the costs down and had continued to put in money from his parent firm or from his personal fortune. In the back end of 2018 it became clear he did not want to do this anymore and began negotiations to offload the operation of the Guild Hall to someone else.
Mr Rigby went on the record in April, to say he was looking for the VMS Live group to come in and take on the Guild Hall. He gave the impression a deal was very close.
The administrator tells a different story. Her report says in February negotiations had slowed, and they were also discussing the operation of the venue with an unknown third party too.
VMS, who have never commented publicly on the Guild Hall, said in the administrators report that information provided to them about the Guild Hall was not complete and this is what slowed the deal down.
Mr Rigby went on the record saying it was the sudden death of the managing director of VMS Live Steve Forster, in a car crash, which was the cause of the delay.
She initially wanted to, solicitors and agents were instructed to find someone to take on the venue and operating it.
Rigby could not be involved in any deal.
Preston City Council set their stall out early, they told teh administrator ‘they were unlikely to agree an assignment of the head lease to any entity which was connected to Mr Rigby’. The man, who in 2014, they had publicly praised for taking on the venue, was now the stumbling block to its future.
When the city council took on the Guild Hall in June, they said there had been ‘significant breaches of the lease’. The administrator says they believe this is the unpaid business rates, understood to be around £250,000 and rising, by Mr Rigby.
The administrator quickly found herself with no deal as the only option. Potential operators said the complexity of the situation, the £112,000 owed to advance ticket holders, the bills unpaid to many promoters and city firms and the adverse publicity surrounding the Guild Hall.
The administrator either could grant a licence for someone to occupy the venue or try for a site clearance – knocking the Guild Hall down – but it would be unlikely PCC would agree to this and it would incur significant cost.
In the report, there’s ‘positive discussions’ held between PCC, the administrator and one particular prospective operator. No details have been given about who this was. We may well find out when the city council eventually reveal who is taking on the venue in a new lease.
Simon Rigby, in his unique style, managed to throw everything up in the air. He issued a press release, to Blog Preston and other media, saying he would be reopening the Guild Hall under a sub-lease to a new charitable foundation. With himself, his long-time PA Lisa Matthew and Mr Flack as the only trustees. The administrator puts it mildly her response to Mr Rigby’s announcement. She had not been briefed, or asked, and so within hours shot down Mr Rigby’s attempt to re-establish the Guild Hall.
This also caused Preston City Council to act, and the administrator agreed to let the city council forfeit the head lease.
The administrators report says they had to pay £50,000 for the fixtures, fittings, plant and equipment and other chattels in the building. There will have been ongoing costs to the city council in then securing the building, making it safe and more – although it is not known how much. We also know a lot of senior officers and staff were tied into working on the project, and all those man hours – although not totted up anywhere – all count for a stretched city council.
This was sub-leased to a separate company, and from 1 August 2018 it traded under a new lease. This kept it separate from the main Guild Hall operation and therefore off the books of the administrator. It’s estimated Mr Rigby spent around £2million on Level. The administrator states they are still looking into Level, as it previously traded under The Villa (Wrea Green) name.
Mr Rigby announced ambitious plans to create a hotel in what was the office block at Premier House. He has full planning approval to do so. The administrator wants to know why the 125-year lease on 18 April 2018 he signed, n eight months, had increased from £225,000 to £650,000 according to records.
Mr Rigby has stated a number of times “no one has lost more than me” when talking about the situation at the Guild Hall. The administrator states Mr Rigby is claiming a ‘fixed charge’ against the Guild Hall, for work that was done to the building. He claims he has put £5.26m into the building of his own money. He has this amount registered as a debenture on Companies House dated 24 August 2018. The administrator says she has not seen detailed analysis on the money owed to Mr Rigby.
An administrators primary role is to get money to pay the creditors, those owed money by the company which has gone into administration. The ‘estimated to realise’ amount is how much the administrator would have to pay creditors, of which there is £4.5million owing to, and the total amount available to the administrator is likely to be around £16,300. There is no lease for the administrator to sell, and that means there is very little money that can be raised from Preston Guild Hall Ltd.
Those paying cash are unlikely to see their money back. If you paid by credit or debit card then you should contact your card issuer and see if they can retrieve the money, or claim it on insurance. But for the thousands of people who bought advance tickets in cash, their money is gone.
The phrase a rock and a hard place is the best way to describe where the administrator would have been. Mr Rigby was likely to be the largest creditor for the Guild Hall, but he could not be involved in any future deal as the freeholder – the city council – said he couldn’t be involved. Beverley Budsworth was finding that the state of the Guild Hall and its financial situation was making it toxic for anyone else other than the city council to take it back under forfeiture.
If the administrator had managed to sell the lease to another operator then there would have been more money available to pay creditors. But would there be £4.5million available through selling the lease? Unlikely. And of that £4.5million, how much would have gone to Simon Rigby himself first? If he had a fixed charge on the building then he would have been a preferential creditor and one of the first paid.
Asked about the decision to go ahead with the forfeiture the city council told Blog Preston: “The decision to proceed with the forfeiture was agreed by the Administrator whose responsibility was to progress with the most financially profitable option for the Guild Hall.
“To our knowledge there were no viable offers to buy the lease and no realistic option for recouping the significant debt owed to creditors.
“We cannot comment on the specifics on the breach of lease, operators who have been in dialogue or details relating to any potential legal proceedings.”
The courts seems like the best bet. The Dreamboys started it off with their petition for being paid a total of £6,676.16. Mr Rigby owns many other companies, which are still trading, and retains his personal fortune. A number of other creditors are also taking court action, and Preston City Council look set to join in legal action against Mr Rigby to recover unpaid business rates totalling some £225,000.
Read more: Listed, everyone owed money by Preston Guild Hall Ltd
The Guild Hall as a venue has remained shut since May 30 this year. There is no sign of it reopening soon.
A report went to the city council’s full council on Thursday August 22 but it was restricted from the press and public, so only councillors were briefed on where progress on finding a new operator is up to.
The city council has made it clear they will not entertain a similar deal done as the one with Mr Rigby. There will be a shorter lease and most likely some kind of subsidy for maintenance costs from the city council, allowing it to keep tighter control.
Now, there’s a question. On the one hand, certainly, Preston Guild Hall Ltd continued to trade, shows were being booked, staff were at work, but no one was being paid for months. Mr Rigby would have known what he was doing there and he kept issuing public statements so his involvement with the venue was still very hands-on.
But, he also took on a venue that was losing £1million of taxpayers money-a-year in 2014 and tried to turn it around. Perhaps he didn’t realise the scale of the task that lay ahead.
He claims to have lost more than £5million on the venue. That does not excuse the way staff, suppliers, promoters and others have been treated but it seems what started out as a labour of love for Mr Rigby, and perhaps a ‘pet project’, became like throwing money down a well. He may have millions, but Mr Rigby is a businessman first and foremost and has shown himself to be a very hard-headed one.
Hindsight is a wonderful thing. Preston City Council were under severe financial pressure in 2013/14 and they were ploughing £1million-a-year into a loss-making exercise to keep the Guild Hall operating at a minimal level in terms of shows. The Rigby deal would have looked very attractive, compared with having to tell the city that its main venue would be knocked down and replaced with a car park (a very likely option back then!) and certainly the first few years there were no issues as Mr Rigby invested and the quality of shows being booked improved alongside new openings in the Arcade.
What’s clear is the city council has clearly decided to do things differently this time in terms of the lease it is offering for the Guild Hall and this seems to have trickled into other schemes too. An update on the Markets Cinema was given and in it the phrase ‘retained in city ownership’ was given.
It would seem that the city council has adopted the old adage of ‘if it seems too good to be true, it probably is’ mantra when it comes to dealing with developers, investment firms and individuals with large private wealth behind them.
Read more: A timeline of events from the Guild Hall going to Rigby to going under