Belper Leisure Centre is an example of a business recovery case, which was rescued outside of a formal insolvency process with the assistance of PKF Smith Cooper.
Background on Belper Leisure Centre
Charity-run Belper Leisure Centre (BLC) is an invaluable cornerstone of the local community, having provided vital leisure and recreational facilities to over 1,500 members, 40 active clubs, the neighbouring high school and several local primary schools for almost 50 years.
BLC had maintained a healthy balance sheet up until COVID-19 struck in 2020. The pandemic resulted in significant closures at the centre, which depleted its financial reserves. Despite the pandemic’s negative impact, as consumer confidence began to return, footfall and turnover were on the increase and the outlook for BLC was optimistic.
In March 2022, BLC became aware of significant increases to utility prices. The anticipated c.70% rise would have been difficult to manage but achievable, however, in December 2022, it was confirmed that BLC would face a c.300% increase. This price hike took utility costs from £112k in 2021/22 to a forecasted £480k in 2023/24.
It was quickly determined that there was insufficient income to cover the cost increases long-term, and BLC began considering options for the future. While several income-generating measures were taken to increase cash flow, it was evident that the centre would not survive without external intervention, accelerated support and creditor forbearance.
Merger & Acquisition Process (M&A)
In February 2023 the Operations Director, having exhausted all funding options, including the local Councils, contacted PKF Smith Cooper to discuss the precarious financial position of the Leisure Centre.
Our business recovery and restructuring experts, led by Dean Nelson and Emily Oliver, reviewed the Company’s financial position and prepared an Options Paper to be presented to BLC’s Board of Directors. The best option, agreed with the Board, was to market the Leisure Centre for sale through an accelerated merger and acquisition process.
A sales flyer was circulated to c.14k contacts identified from a targeted database search and PKF Smith Cooper’s own database of interested parties. The opportunity was also advertised on a national website. A number of parties expressed an interest in the opportunity and, after signing a non-disclosure agreement, were provided with access to a data room of pertinent financial, commercial and operational information about the Leisure Centre.
Several parties expressed an interest in buying the Leisure Centre, but Trilogy Active, a not-for-profit organisation and registered charity, was identified as the most suitable acquirer and preferred bidder. Following discussions with our business recovery and restructuring team, it was established that Trilogy Active would need additional funding support from the local authorities (specifically Amber Valley Borough Council and Belper Town Council) as well as debt leniency from Belper School, for the ownership transfer to proceed.
Additional support
Throughout BLC’s journey to recovery, the cause was bolstered by outstanding support from the local community. A group was formed by community members to support efforts to save BLC and put pressure on local authorities through public meetings, a dedicated Facebook page, a petition with c.6.5K signatures and a 4-mile protest march that saw dozens of people walk from Belper to Ripley.
With the level of community interest, PKF Smith Cooper assisted the Board in regularly preparing press releases about the centre’s plight to local news outlets, as well as attending community support groups. Furthermore, our team also supported the Board by regularly communicating and attending meetings with other key stakeholders, such as the Company’s incumbent financiers, employees, trade unions, a neighbouring school, community groups, local councils, the local MP, Sport England and the Football Foundation.
Belper Leisure Centre’s future secured
On 1st August 2023, having assisted with formulating an agreed support package with AVBC and Belper School, our business recovery and restructuring team were successful in securing the future for Belper Leisure Centre with Trilogy Active becoming the new Trust members and trading the business as a going concern.
Dean Nelson, who led our team on the rescue efforts, commented: “Belper Leisure Centre provides such a vital service to the community, users and clubs that rely on its facilities as well as its employees. We are very passionate about doing the right thing for the client and, in this case, having reviewed the Company’s financial position and determined the options available, we believed we could avoid a formal insolvency process. Therefore, with the Board’s approval, we devised and implemented a strategy to do just that.”
Rachael Vickers, Operations Manager at Belper Leisure Centre, said: “Due to the significant utility price hikes, we’d prepared financial forecasts for the following year and could see that we would run out of funds to enable us to continue trading, even if we were to implement many cost saving initiatives. Having worked at the Leisure Centre for 24 years, I know how important the Leisure Centre is to the local community, local schools and the neighbouring high school. I explored many funding options, one of which was to request support from local councils, but at that time they were not able to assist. I felt that we had nowhere else to turn.
“Our solicitor recommended Dean Nelson and his team from PKF Smith Cooper to look at the options for the Leisure Centre. As soon as they were engaged, it felt like a weight had been lifted from my shoulders and we had a team fighting in our corner.”
Rachael Vickers, Operations Manager at Belper Leisure Centre
“They reviewed the company’s financial position and proposed some options to assist the Leisure Centre, one of which was to market the Leisure Centre for sale, which was approved by the Board. In addition to this, they assisted with meeting and liaising with various key stakeholders including Councils and community groups. They also prepared press releases and communications with staff.
“I’m really pleased to be working with Trilogy Active as our new Trust members, and feel assured about the future prospects of Belper Leisure Centre.”
Recovery services from experts that care
At PKF Smith Cooper, insolvency is always the last resort. Working together, we can explore all the options and avenues available to you in order to secure the best possible outcome for your company and key stakeholders. The earlier you seek assistance, the higher your chances of a successful recovery. Contact us today for a confidential discussion about your current situation with one of our business recovery and restructuring experts.