West Kent and Ashford College has been put into education administration, making it the second college to fall under the insolvency regime.
At the High Court today, Insolvency and Companies Court judge Sally Barber granted the petition put forward by the Department for Education at the request of WKAC.
The Ofsted grade three college will now be under the legal control of administrators BDO, who have been appointed to achieve the best results for creditors while minimising disruption to WKAC’s 4,500 students and 463 staff.
The court heard that in 10 of the 13 weeks between 29 July and 27 October the college has had a cashflow deficit. It also owed £1.6 million in debts that were overdue by over three months, and net liabilities of £17.5 million by the 31 May 2019.
In her judgement, Judge Barber said the college is “plainly insolvent” and this is an “appropriate case to grant the order”.
“Learner protection is clearly a very significant factor and the evidence before me suggests that protection is at the forefront of the minds of those putting together the proposal,” she added.
WKAC’s sister college, Hadlow, was the first to be put into education administration in May.
Kent MP Tom Tugendhat said yesterday that, as part of plans to split WKAC between North Kent College and East Kent Colleges Group, the campuses needed to be “formally broken apart”.
He said the Education and Skills Funding Agency confirmed that applying for educational administration is the “most effective way of achieving this complex transaction”.
Tugendhat offered reassurances this is “not a new problem – rather, the beginning of a solution”, and FE Commissioner Richard Atkins said he believes this is the “beginning of implementing a better future for learners, staff and the wider community in Ashford, Tonbridge and West Kent”.
WKAC chair Martin Doel said that while the college’s finances have been stabilised over recent months, the college is “faced with exceptional outstanding liabilities and would be insolvent without external support”.
If the sale goes ahead, this would be the second time the West Kent and Ashford campuses have been split up in ten years – they were adopted by Hadlow following the collapse of K College in 2014.
Graham Morley, interim principal at the college, reassured staff and parents entering education administration “will not affect the day-to-day operations of the college”.
“All courses will continue as normal and they should still apply to, and enrol with, us for this September,” he added.
Government guidance for further education bodies which become insolvent states the administrator must prepare a report on the conduct of all of the governors for the last three years for the business secretary.
The Insolvency Service will then review these reports and decide whether to seek to disqualify any of those governors; however, board members could also face jail sentences if it is found they have committed a statutory offence.
Education administration will only apply to WKAC itself and not its subsidiary, the Rosemary Shrager’s Cookery School.
Both WKAC and Hadlow College, which make up the Hadlow Group, have been subject to intervention from the FE Commissioner Richard Atkins and have been under financial health notices of concern with the ESFA.
A report by Atkins, published in May, revealed how Hadlow Group’s leaders concealed the truth of its financial position until the college needed bailing out, in a “corporate failure of leadership”. “We were genuinely shocked by what we found”, he told FE Week at the time.
The principal, deputy principal and several governors, left their roles at Hadlow and WKAC earlier this year following allegations of financial irregularities.
A Department for Education spokesperson said: “Following a request from West Kent and Ashford College, the college has today been placed into education administration.
“The ESFA will continue to work closely with the administrators and with West Kent and Ashford College to minimise disruption to staff and students, and to deliver a longer term solution to protect the provision of Further Education in Kent.”