A deal to save the charity People Can, which went into administration last month, fell through at the last minute because Somerset County Council would not transfer its contracts to a merger partner, according to its former chief executive.
People Can, which supports homeless people, victims of domestic abuse and ex-offenders, went into administration last month because it could not carry on trading with a £17m pension deficit. The move put about 300 jobs at risk.
Maff Potts, who stepped down as chief executive once the charity went into administration, told Third Sector he had agreed a deal to save the charity with Broadway, the homelessness charity, which would have involved a ‘pre-pack’ administration.
In effect, this would have led to staff and contracts being sold to a merger partner, but all other assets, including cash and property, remaining with the charity to pay the creditors, of which the charity’s pension fund is by far the largest.
The ‘pre-pack’ would have involved 18 commissioners transferring contracts from People Can to Broadway. Potts says that at first, all 18 agreed, but Somerset Council later refused to accept the deal.
"And then after that, they tried to negotiate," he said. "They asked for money, and they asked for a written confirmation that Tupe did not apply."
He said that Tupe - the Transfer of Undertakings (Protection of Employment) regulations, which governs staff rights when transferring to a new employer - is a matter of law, and not something which an employer can waive.
Potts said that Somerset had also not replaced the support services his charity had been providing. Instead, he said, 296 clients had been sent a letter with a phone number to call if they had problems.
"These are incredibly vulnerable people with extremely complex needs," he said. "They’re at risk of suicide, depression and abuse."
A spokesman for Somerset County Council said: "There are legal constraints governing the way we handle contracts and, unfortunately, the proposals put forward were not an option for the council.
"We acted swiftly as soon as we were informed that People Can was going into administration, identifying appropriate alternative providers in each district who were willing and able to offer support to people who would otherwise be without it when People Can ceased to trade. The services they provide are different but appropriate to people’s needs.
"Everyone who had been getting support from People Can was written to with information on how to get alternative support and we believe that this has worked well."