Intercompany loans linked to £8.4m collapse of training business
A report by liquidators has revealed that £331k in intercompany loans – deemed to have ‘no commercial justification’ – played a key role in the collapse of multiple businesses linked to Birmingham Pride festival director Lawrence Barton.
The loans were made by GB Training to iconic LGBTQ+ bar The Nightingale, GB Holdings, and Good With Wood. Just days later, GB Training ceased trading, and liquidators were appointed a month after.
GB Training owes £8.4 million to creditors, including the Education and Skills Funding Agency (ESFA) and the West Midlands Combined Authority (WMCA), both of whom have ‘little prospect’ of recovering funds.
As neither The Nightingale or GB Holdings were ‘in a position to repay debts due’, liquidator Kevin Mawer of Forensic Recovery said in a 19-page report that “there appears to be no commercial justification for advancing such large sums to these connected companies.”
The report says GB Training has lost almost £2.5m as a result of making interest free unsecured loans to other companies – “for which it would seem to have received little benefit”.
A spokesman on behalf of Barton and Mawer told TheBusinessDesk.com: “We are in discussion about a settlement of all matters between us, which we hope to conclude in the coming days. But, as the terms of any settlement will be confidential, it will be inappropriate to say anything beyond that.”
GB Training collapsed during the pandemic after the ESFA ceased funding new apprentice contracts and launched an investigation after uncovering ‘potential discrepancies’ in the way funds were allocated.
Three years on, creditors submitted claims of £8.4m and removed previous liquidator Christopher Moore and appointed Mawer.
The report says the ESFA claim of £4.7m “relied upon a sample of six employers and 110 learners and concluded a high incidence of non-compliance’. The WMCA is claiming just over £1m and North East Surrey College of Technology (NESCOT) is owed £2.6m.
Barton has disputed claims made by ESFA and said in a statement to Birmingham Live: “The Insolvency Service conducted a full and independent two year investigation into my role as a director following a complaint made by ESFA in respect of GB Training. After an extensive review of all relevant evidence, they determined that no action was necessary and there were no findings of misconduct. That decision was reached independently by the UK’s official regulatory body for director conduct and remains a matter of public record.”
In March 2024, Mawer sought repayment of the £331k loans, which had been used to cover rising costs and overheads at The Nightingale and GB Holdings. The pressure to repay resulted in administrators from FRP Advisory being appointed to both businesses, leading to their liquidation.
Barton later acquired the businesses through a management buyout, transferring their assets – including The Nightingale, The Village Inn (one of Birmingham’s oldest LGBTQ+ venues), The Loft Bar & Kitchen (near the Hippodrome), Solihull Summer Fest, and Paric Festival (Birmingham’s largest Irish music event) to Develop Excellence Ltd. The deal protected over 80 jobs and placed the businesses under the direction of Terence Runcorn and Gillian Barton.
Runcorn, who was part of GB Holdings’ operations team, was also a director of The Nightingale.
Mawer’s report says that an agreement was reached with Good With Wood to pay £45k, despite the firm disputing £107k of debt. To date, £37k has been received.
A £669k debt from Got it Covered, which was owned by GB Training, was also written off in 2018 before the company was dissolved.
