DEDICATED staff had to work unpaid to make sure vulnerable people were supported after a city charity abruptly went into liquidation with hundreds of thousands of pounds worth of debt.
Long established Newport charity SEWREC worked with vulnerable people across areas including age, disability, gender reassignment, race, religion or belief and sexual orientation.
But on November 19 last year, the charity’s bosses told stunned staff that they were out of work and the charity was being liquidated – the day before pay day.
It’s also understood no groups who work with the charity, funders or creditors were warned of the decision.
Since the charity closed its headquarters in St David's House on Commercial Street, debts of at least £163,197.66 have been revealed.
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Paperwork shows 22 staff were owed £23,657.80 worth of wages on holiday pay, which the charity mostly paid by emptying their accounts of their last funds and selling office equipment.
Despite the efforts, around £1,500 is still owed to staff, and affected staff can apply through a government fund for the remainder.
Debts which the company was not liable to pay to staff included £59,355.76 worth of pay in lieu of notice and redundancy payments.
But it’s also understood that these payments have mostly been made – with the government stepping in to bail out the workforce.
Trade creditors have found themselves out of pocket to the tune of £31,650.17, and the former chief exec, who retired weeks before the announcement, won’t see a penny of a £17,500 loan he gave the charity paid back.
HMRC will also miss out on £31,033.93 of outstanding Pay As You Earn and national insurance payments owed by the charity.
In all, 17 creditors, including Gwent Police, Newport City Council, Welsh Water and Walter Hunter and Co accountants, will now forfeit £80,184.10.
In the financial year ending March 2018, Newport City Council gave the charity £477,293.
The SEWREC offices in Commercial Street. Picture: Joshua Thomas
These funds were split between restricted funds – meaning the charity had to use them to pay for specified groups and services – and unrestricted funds which they could use as they saw fit.
A council spokesperson confirmed the local authority gave SEWREC a “small annual grant … but also commissioned a number of services.”
“A significant proportion of the funds given by the city council in previous years was for the family skills element of the Family First programme in Newport after SEWREC successfully bid to deliver the scheme,” they added.
“It worked with other partners but, as the lead organisation, was responsible for the distribution of the funds.”
Published SEWREC accounts from the year ending March 2018 show £298,188 of council money was given to the charity for the family skills part of the programme.
Funding for Family Skills ended year ending March 2018.
The same accounts show that SEWREC had £7,968 in the bank at the end of the last financial year, up from a £27,283 deficit the year before.
It’s understood the board of trustees took professional advice on the state of the charities finances after Mr Williams’ decision to retire.
But, nursing crippling debts, they decided to voluntarily liquidate the charity eight months after the accounts were published.
The SEWREC offices in Commercial Street. Picture: Joshua Thomas
Though the council has said they have found new providers for its commissioned services previously run by SEWREC, the decision could still leave vulnerable people in the lurch.
A source who worked at SEWREC but asked not to be named told the South Wales Argus no warning was given to staff members, projects or people who relied on the charity for support.
With others, they felt they had to work unpaid to carry on heling those the charity had previously supported.
“The whole thing was really poorly handled,” they said.
“In terms of the people we work with they were very vulnerable and they are really depended on SEWREC, and are often going through some very difficult times.
“They have no one else to turn to.
“The staff were all called into a room on November 19, and told to leave our work computers and that we no longer worked there. That was the first any of the staff knew.
“It was the day before pay day, leaving people without a Christmas pay cheque.
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“We were all so shocked. We had vulnerable clients that needed our support.
“People carried on working for free to make sure they had the support they needed.
“The chief exec announced his retirement, but we were all told nothing else would change. We were trying to work out the way forward for the charity.
“There must have been other options so we could continue to support these people.
“We used to get 50 to 80 people through the doors every day. Where will they go now?”
It’s not the first time the company found themselves in financial hot water.
In 2009 Newport council stopped paying SEWREC wages after money owed to the local authority rose to more than £180,000.
A spokesman for the council said: “We are disappointed that the charity had closed after many years of dedicated help to vulnerable people in Newport and the wider region.
“We became aware late last year of proposals to close the organisation and have been able to find new providers for our commissioned services still being provided by SEWREC.”
Menzies have appointed administrators to oversee the liquidation.
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