Lifeline Project owes creditors almost £6.2m

The drug and alcohol charity, which collapsed in May last year, has sufficient funds to repay only £3.8m

The charity provided drug services
The charity provided drug services

The collapsed drug and alcohol charity the Lifeline Project faces claims of almost £6.2m from unsecured creditors, but has only sufficient funds to pay back about £3.8m, an administrator’s progress report for the charity says.

The Lifeline Project collapsed in May 2017 and transferred its entire staff and the majority of its projects to the charity change, grow, live a month later.

The progress report, posted on Companies House last week, says that unsecured creditors should receive 62.4p in the pound when distributions are made. This is because a shortfall of £2.3m exists between the amount claimed by unsecured creditors and the amount available for distribution.

Preferential creditors will receive £37,273, the progress report says.

The latest update comes after a document was published in August to detail the results of a meeting of creditors.

That document said there were 5,300 potential creditors that were collectively owed £1.6m.

It also explained that Lifeline’s income had grown significantly from £13m to £62m between 2006 and 2016, but this fell to £53m in the 11 months to February 2017.

Much of the growth of the charity had been funded by cash flow and reserves, which were "virtually exhausted" because of funding losses on contracts in the year before its collapse, it said.

Lifeline had trading losses of £2.9m in the 11 months to February 2017, which led to merger discussions with CGL. The sale of the business and its assets to CGL went ahead on 2 June.

About 1,300 staff were transferred to CGL, which mitigated £7m in redundancy and associated costs.

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