The Directory of Social Change is out of pocket by £267,028 over the GuideStar deal but is likely to recover at least £48,000 from the sale of the assets.
New documents filed with Companies House this week by the administrator Anthony Kent show that on 11 October 2010, GuideStar Data Services CIC went into administration owing £404,752, with DSC owed the most. Experian, the company that had the job of extracting and digitising the information from charities’ annual reports and accounts, is owed £164,862. The Charity Commission is owed £15,000; HMRC £2,500 and other creditors £12,349.
However, since that estimated statement of affairs was prepared, GuideStar International (GSI) has also submitted a creditor’s claim, for £230,000, and HMRC’s claim has increased to £24,681.
In his ‘estimated administration outcome statement’ dated 17 November, the administrator said there would be £129,138 available to pay creditors once legal costs and the administrator’s fees had been paid. Yet the creditors, including GSI, are owed £713,921 between them, leaving a shortfall of £584,784.
Kent noted that all the creditors’ claims have not yet been adjudicated upon, “but at present simply acknowledged”. He said the estimated return to the creditors is 18p in the £1.
DSC paid £1 for GuideStar Data Services
Explaining the background to the administration, Kent’s report states that GDS was incorporated on 30 January 2008 to operate the GuideStar UK website and sell relevant database information on the sector to commercial organisations for profit.
On 1 March the shares in the company were sold to DSC for £1. The accounts for the year to 31 December 2008 showed turnover of £580,000 and a net loss of £718,000. Accounts for the following year were prepared in draft form but not signed by the board nor filed at Companies House.
He wrote: “Following the purchase of the shares by the DSC in March 2010 it was discovered that the database and software to enable the website and business to be operated was not as complete as thought and a considerable amount of time in development had to be expended in resolving the technical issues which arose.
“DSC therefore had to commit significant resources to rationalise and develop the product. The costs of maintaining and improving the website were finally too high for DSC to fund and a decision was therefore taken to cease trading and seek professional advice.”
Kent added it was initially thought that the agreement between DSC and GuideStar International (GSI) required the return of the website and database to GSI if GDS went into administration. But after legal advice it was determined that these assets did belong to GDS and could therefore be sold, though the GuideStar brand remained with GSI.
Wilmington Group paid £121,000 to buy the assets.
Kent said the administration of the company had achieved a better result for creditors than if it had been wound up immediately. If it had gone into liquidation then creditors would only have recovered 3p in the pound, rather than 18p. But it was not possible to rescue the company as a going concern as it had stopped trading before the administrator was appointed.
He suggested that in order to enable the remaining funds to be shared amongst the creditors, the company should now be placed into creditor’s voluntary liquidation.
