Wednesday, December 7, 2022

News: "Data irregularities" led to Rotherham training provider going into administration


A national training provider based in Rotherham called in the administrators after the Government withheld its funding.

Bosses at Lifeskills initially disputed a claim from the Education and Skills Funding Agency (ESFA) over "data irregularities" but a suspension of £1.2m of funding caused serious cashflow issues. The agency has since asked for over £1.5m to be returned.

72 people were made redundant, with hundreds of learners also affected.

LifeSkills Solutions had its head office in Rotherham with other sites in Basildon, Lowestoft, Leeds and a fifth centre due to open in Sheffield this year. The company delivered Study Programme and Traineeships for over 1,000 learners per year across a wide range of vocations. It celebrated its 20th anniversary in April this year, having worked with over 22,000 learners since it’s formation.

Rated good by OFSTED in its most recent report, the company was profitable and had a turnover close to £5m for the year ending March 2022.

A report from the administrators of Lifeskills, Begbies Traynor, showed that problems arose when the ESFA appointed auditors at KPMG to conduct a regulatory funding audit at the company in March 2022.

The report states: "The audit resulted in a number of queries and concerns raised by the ESFA in relation to data irregularities. The Company entered into communication with both KPMG and the ESFA in respect of these queries in order to agree a suitable timeframe for a meeting to address the same.

"On 29 July 2022, the Company received a suspension letter from the ESFA which suspended all future funding whilst they completed an investigation into the Company and the aforementioned data irregularities.

"Consequently, the Company instructed solicitors, CMP Legal Limited, to review the position and issue a response to the ESFA, requesting a full breakdown of the audit findings.

"As a result of the funding being suspended from the ESFA, the Company had withheld funding in excess of £1,200,000 which was causing significant cashflow problems for the Company.

"In response to this, the directors of the Company sought advice from Begbies Traynor on the Company's financial position. Begbies Traynor attended an initial meeting with the directors on 3 August 2022. At this point, the directors had disputed the concerns in respect of the data irregularities which arose as a result of the funding audit completed by KPMG and had instructed solicitors. Although the withheld funding was having a negative impact on cashflow, the directors were hopeful that the position could be resolved and forecasted that the Company could continue to trade until October 2022 to allow sufficient time for this to happen."

In September the audit findings were sent to the company and, with payments still suspended, the ESFA issued an invoice to Lifeskills which detailed a claim for over £1.5m.

Keeping the business trading while a buyer was found was discounted by the administrators after it assessed that there was "no gaurantee of reaching a resolution with the ESFA."

A pre-packaged sale of the business, which could have facilitated 72 jobs being saved, was also blocked.

There was substantial interest in the business from alternative learning providers. 23 enquires were received form interested parties and 15 went on to sign Non-Disclosure Agreements.

The report explains: "On 11 October 2022, the directors and proposed administrators attended a virtual meeting with the ESFA to discuss the interested parties. The ESFA initially advised the directors and proposed administrators that they would consider funding a purchasing entity however, when approached by various interested parties, the ESFA retracted this consideration given the unresolved issues with the Company and consequently, no formal offer to purchase the business and assets was received and a pre-packaged sale was not a viable option. Therefore, the directors proceeded with placing the Company into administration by signing the relevant appointment documents."

Assets, including its Enterprise House HQ in Rotherham, are currently being sold off. Major creditor, Barclays Bank is hoping to recoup money from the sale. Other creditors will need to wait and see what money is left over from the sale of any assets.

Begbies Traynor website

Images: Eddisons


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