Around 1,300 UK jobs have been saved after an eleventh hour deal was struck to avoid one of the largest charity failures of recent years.
Lifeline Project, a drug and alcohol abuse organisation that looks after 80,000 vulnerable people, was saved yesterday evening after local councils were convinced they needed to step in to help.
A failure of Lifeline would have been the largest insolvency in the charity sector since the controversial demise of Kids Company in 2015.
Financial experts from FRP Advisory were in a race against time over the last two weeks to find organisations prepared to take on Lifeline’s contracts.
Change, Grow, Live (CGL) took on the majority of the contracts with 1,000 staff moving over with them.
But a key sticking point was convincing local authorities that it was in their interests to also take on some contracts and staff.
Sources familiar with the situation told City A.M. a last minute meeting was convened with councils on Thursday, a day before cash dried up completely.
Despite being under pressure in recent years from cuts to spending, the local authorities agreed to take on the balance of the contracts and 300 jobs. Lifeline has 70 centres across the UK and the largest individual contract will be transferred back to a local authority is based in Stoke-on-Trent.
Yesterday evening FRP Advisory was appointed as administrator of Lifeline and immediate rubber-stamped the transfer of contracts and jobs to CGL and the councils.
Lifeline has grown rapidly in recent years, FRP Advisory said in a statement, with turnover reaching £61.4m in the year to March 2016.
However, under the weight of cuts to public expenditure and some poorly funded projects, Lifeline’s turnover fell and it was making a significant trading loss.
FRP Advisory was drafted in to explore alternatives by Lifeline. It is understood its influence was pivotal in convincing the councils that a failure of the charity would leave tens of thousands of vulnerable people coming to them for help.
Joint administrator David Thornhill said Lifeline’s management had worked “in close co-ordination with relevant local authorities helped create a solution”.
He added: “No users of the services provided by Lifeline should be affected by its insolvency.
We are also delighted that the work that has been done over recent weeks has ensured that around 1,300 members of Lifeline staff have been transferred to new employers and there have been no redundancies as a result of the administration.
"That is testament to the goodwill of CGL, the commissioners of services and the staff themselves to all of whom we offer our thanks.”