DERBY PLAYHOUSE

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The Playhouse's board has made a last-ditch offer to the people to whom it owes money in a bid to save the theatre from liquidation. It says creditors will share £500,000 pounds if its bid for compensation from Arts Council England and Derby City Council is successful. The board claimed the Arts Council had acted beyond its powers in February by voting to liquidate the theatre and that the city council had prevented it from staying open last November. The allegations, which are denied, are under investigation by Government ombudsmen, who rule on complaints and can award compensation. Board chairman Professor Jonathan Powers said the plan "hinged on the investigators' decisions" and that a combined seven-figure sum was wanted from the two authorities. The plan also depends on whether the board is granted an extra six months to pay its creditors after failing to fulfil a previous agreement to pay them £300,000.

Mr Powers said, "It's in the hands of the creditors as to whether they accept the deal. The first point is that the ombudsmen must find evidence of maladministration. If this is found I will provide a list identifying the cost of the damage that has been done." If the complaints are unsuccessful, Mr Powers said the £500,000 would be raised by selling the Playhouse lease which is valued at "between £800,000 and £1m". Mr Powers said, "If we don't get the compensation or a generous benefactor coming forward, we will offer up the lease. We hope we will get the money by other means, but if we don't then this is what any normal commercial organisation would do. And if we got the full market value then the company will also have enough working capital to be able to set up shop elsewhere." The city council is still considering putting in an offer for the assets if the Playhouse is liquidated. The building would then come under the control of the council, which would be able to use it to stage productions under its Derby Live scheme

Derby's Tory leader Philip Hickson, one of two councillors on the Playhouse board last year, said the authority's plan seemed the only viable option. He said, "It's a year since the theatre looked for major investment and it's clearly not forthcoming. The latest plan shows that the board are still living on a fantasy island." An Arts Council spokeswoman said it was dedicated to helping the Playhouse continue to produce theatre. She said, "The plan is that the Arts Council and Derby Live will provide an interim alternative if the board's bid fails. We absolutely deny we acted out of our remit and believe it's inappropriate for the board to make the offer it has before any decision on their claims has been made." Administrators Tenon Recovery said the board's new offer would be put before the creditors who would vote whether to accept. (Source: Derby Evening Telegraph, Nov/08)

The Playhouse's board has asked property agent Savills to find out how much people would be willing to pay for the theatre's lease. The board's rescue plan is based on it securing a seven-figure sum, with £500,000 of that going to creditors. Professor Jonathan Powers, chairman of the Playhouse board, hopes the cash for the rescue plan will come from a compensation claim he has lodged against the Arts Council for England. To act as security against the rescue plan in case it fails, the board wants to effectively mortgage the theatre's lease. This would involve an organisation agreeing to advance money to the board on the understanding that if it cannot pay it back, that organisation would take control of the lease and have the right to sell it on the open market with creditors getting some of the cash.

The theatre building is owned by Westfield, who rents the building to Derby City Council, which in turn sub-leases it to the Playhouse board. The lease has 92 years left on it and rental payments are being made by the administrators. Previously the Playhouse board valued the lease at about £1m. This figure has been questioned by the council. The council has said it will put in an offer of £350,000 for the assets of the theatre if it is liquidated. Patrick Ellward, of administrator Tenon Recovery, said that was because he wanted the council's offer formalised before the meeting was held. A spokeswoman for the council said, "We are in the advanced stages of agreeing a formal contract with the administrators, conditional upon the outcome of the creditors' meeting." This would mean the offer would become active only if creditors voted against the rescue plan. (Source: Derby Evening Telegraph, Nov/08)

Efforts by the board of Derby Playhouse to market its lease have prompted warnings to potential buyers from Derby City Council. The board wants to effectively mortgage the theatre's lease. That would involve an organisation agreeing to advance money to the board on the understanding that if it could not pay it back, the organisation would take control of the lease and could sell it on the open market, with creditors getting some of the cash. However, the city council said it had "grave concerns" that the board would end up defaulting on payments, meaning the building's lease could be sold off to be used as something other than a theatre. It warned anyone interested in the lease that, as the planning authority, it would be concerned about losing a theatre.

Jonathan Guest, the council's director of regeneration and community, said, "The concern is, if the Playhouse fails and defaults on repayments, then the mortgagee can take over the building and attempt to sell it for uses other than as a theatre. A planning approval for change of use would need to be obtained. I am sure the council as local planning authority would be very concerned at the prospect of the city losing its theatre. Any aspiring mortgagee needs to be well aware of the prospect of such a change of use not being granted." Administrators Tenon said they were waiting for firm proposals from both the Playhouse and council before writing to creditors and calling a meeting. (Source: Derby Evening Telegraph, Nov/08)

The Playhouse's former artistic director, Stephen Edwards, is set to try to save the theatre. He is offering to pay £45,000 of his own money to boost a rescue plan being put forward by the Playhouse board. In return, he would take the theatre's lease as security until a long-term lender can be found to get the business running. The city council leases the Playhouse building to the board and the £45,000 would allow the rent to be paid and prevent the company from being liquidated.

If they agree to the Playhouse's rescue plan, the board would be given until the end of April to find a long-term lender but if the creditors turn it down, they would then have to consider an offer on the table from the city council to buy the theatre's assets. If the Playhouse's rescue plan is agreed but ultimately fails, the lease would be sold, with creditors getting some of the cash. The board believes the lease is worth up to £1m and if it is sold, the amount Mr Edwards receives back would be capped at £45,000.

The Playhouse board would need to find at least £300,000 by April 30 to secure the future of the company. Mr Edwards said he was trying to buy the board more time. He said, "I am doing this on behalf of the board to buy it another six months. It is what I have wanted to do for about a year." The board is pinning its hopes on a compensation claim made against the Arts Council to Government ombudsmen.

Agent Savills has been acting for the board. A report in documents circulated to creditors reveals that, while inviting interest in the building, it was told one organisation had already been offered it, but it did not say by whom. The document by Savills' director Victor Ktori states, "...I spoke with the relevant acquisition surveyor acting on behalf of a major food retailer who somewhat surprisingly told me that the site had already been offered to them." (Source: Derby Evening Telegraph, Nov/08)