Llangollen Railway Trust ‘will overcome' new £30,000 bill from creditors
THE Llangollen Railway Trust is confident that the reopened line can overcome its latest financial setback.
The trust has been advised by lawyers acting on behalf of administrators that £30,000 which had been placed in a separate bank account by the directors of Llangollen Railway Plc's trading arm, intended to cover sales of tickets and experiences in advance, must be made available to the general body of creditors.
In March, the plc announced that it had invited its bank to appoint receivers after recording a loss of £350,000. The move was followed by a sale of rolling stock owned by the plc, before the trust formed a new body to save and reopen the line.
The trust's financial director, Phil Freeth, said: “We are disappointed with this outcome and wish to extend our sincere apologies to all those customers of Llangollen Railway Plc who will lose money over this. At the same time, we also have to acknowledge the administrators are only doing their job as the law dictates.
“The directors of the plc didn't do anything wrong particularly; it is fairly common practice to use advance sales and customer deposits to fund working capital. However, we can't have this situation arising again if it can be avoided.
“The funds were only put into the separate account, very late in the day, from an overdrawn account. The directors of the new board of the trust have therefore created a Sales in Advance account, cash backed from an account substantially in credit, with immediate effect. Hopefully this early step will prevent any similar recurrence should the trust fall into financial difficulties in future.”
“The administrators will now be in touch with numerous customers fairly shortly to invite them to claim in the administration.”
The trust has also withdrawn its application to the National Heritage Lottery Fund for finance to fund the post of general manager for two years, while it lays down new foundations through governance, organisational structure, culture, strategic plan, a business development plan, documented policies and other procedures.
Trust chairman Pete Edwards said: “It is crucial to get this done so as to place the trust on a sound operational footing. Thanks to donations from so many supporters, grants and a significant legacy, the trust's cash flow is now secure through to 2023.”