First college set to go into ‘education administration’

The Department for Education has confirmed it petitioned the High Court for Hadlow College to be placed into “education administration”, under the insolvency regime created by the Technical and Further Education Act 2017.

The High Court is expected to respond on 22nd May. Insolvency practitioners BDO are understood to have been lined up as the college’s administrators, should the insolvency be approved by the court.

The colleges in the Hadlow Group and Hartlepool College had previously been served with financial health notices to improve by the Education and Skills Funding Agency (ESFA).

West Kent and Ashford College, part of the Hadlow Group, was found to have inadequate financial health in 2017-18 based on the three-year financial plan submitted in January 2019, and in 2018-19 due to the requirement for exceptional financial support, according to the letters from the ESFA.

Hadlow College was also found to be in inadequate financial health in 2018-19 due to its requirement for support. This “continues to put [both institutions] into scope for continued intervention by the FE commissioner team, working alongside ESFA colleagues as appropriate”, the letter went on to say.

Meanwhile, Hartlepool College of Further Education has also been served a financial health notice to improve, due to the ESFA’s assessment of the college’s financial record for 2017-2018. This brings the college into scope for referral to the Further Education (FE) commissioner for an independent assessment “of the college’s capability and capacity to make the required changes and improvements within a reasonable period of time”.

A spokesman for the Department for Education said “We can confirm that following a request from Hadlow College we have applied to the court to place the college in education administration. This is a matter for the court and it would be inappropriate to comment further until a decision is made.”

A spokesman for Hadlow College said: “In recognition of the significant financial difficulties facing Hadlow College, a petition was filed by the education secretary, on behalf of the college, for it to be placed into education administration.  The objective of an education administration is to avoid or minimise disruption to the studies of the existing students of the college, and those who have enrolled, as a whole while securing the best outcome for creditors as a whole.”

“Hadlow College will continue to operate as normal and courses will continue as scheduled. Qualifications will not be affected by this process. College staff will continue to be employed and we envisage no changes to staffing as a result of the appointment, in due course, of education administrators.”

David Hughes, chief executive of the Association of Colleges said “This is an exceptional case under new legislation which has never been used before. Because of that, everyone involved in this will be learning as they go, so it is more difficult than usual to forecast what might happen.”

“We know that the Department for Education was providing exceptional financial support to Hadlow College to cover running costs and that the decision was taken to petition the High Court to place the college into educational administration.”

“The court will decide whether to appoint an education administrator using the new college insolvency regime introduced by Parliament. The education administrator has a primary duty to protect the interest of current and enrolled students first, and then creditors so the normal activities in the college will continue in the short-term and students should hardly notice any difference.”

“That is an important difference to straightforward commercial insolvency and students and their families, as well as staff, should be reassured by that.”

Source: Tes.com