Coventry City of Culture Trust - case update

The National Audit Office (NAO) has published a report into public funding awarded to Coventry City of Culture Trust before the Trust ultimately fell into insolvency in early 2023.

Coventry was selected in 2017 to become the third UK City of Culture since the initiative began in 2013. Coventry City of Culture Trust was set up to fundraise for the bidding process prior to being selected, and was also responsible for fundraising and running legacy projects after Coventry won the title.

Coventry's year as UK City of Culture was initially meant to commence on 1 January 2021, but was delayed to 31 May 2021 due to the COVID-19 pandemic. The pandemic adversely affected business activities, since attendance at events was much lower than expected.

To assist it through what was thought to be a short-term cash flow problem, the Trust received a £1 million loan from Coventry City Council in October 2022. However, the Trust's cash flow difficulties continued, and Daryl Warwick and Michael Kienlen of Armstrong Watson were appointed Joint Administrators of the Trust on 28 February 2023.

Now, the NAO has published a report outlining what led to the Trust's downfall, including the pandemic, unexpectedly low ticket sales for events and, interestingly, what the report describes as a "significant accounting error" and refers to on multiple occasions.

According to the report, in August 2022, the Trust identified an accounting error affecting its costs for summer 2022 and reported the issue to Coventry City Council. On 28 September 2022, the Board of Trustees discussed the accounting error for the first time, and agreed that it was necessary for there to be an independent financial review of the processes and events that led to the trust's financial situation. In early October 2023, the Arts Council England requested detail on the elements of the Trust’s financial issues, including the accounting error. It is not clear from the report who was responsible for the error, the ultimate cost of the error, and what the outcome was.

The Joint Administrators have been assisted by Addleshaw Goddard, BPI Asset Advisory and Moorcroft Property Group. Their proposals can be found HERE, and the NAO report can be found HERE.