Dear CIC members,
We sadly have to close down the CIC which I have been running for the past 5 years. We have made a big difference to many children with learning problems, but the cost of developing and researching the materials we use, and the cost of providing the services we provide to schools, has exceeded the income by a long way.
We have no debts to anyone but myself, as I have been supporting the company with my own money. We also have no employees but myself.
I would very much appreciate advice on the process of transfering assets to compensate in part for the company's debt to myself:
The CIC has some assets (old computer, software etc) which are worth much less than the company's debt to myself - how can I transfer these assets to myself in part payment of the debt, as they are not of much use to anyone else?
How can I waive the rest of the debt, so that the company can close without debt?
I know that after three months without trading, the company can apply to be struck off, so I intend to follow that route.
Thanks very much for any advice you can come up with! This is a very disappointing time, as the methods worked so well for children, and I have put so much effort, time and money into the venture.
Elizabeth McClelland, Move4words CIC
Did you have formal agreements for the debts you have accumulated personally with the CIC? I would suggest supplying the information in full to the CIC Regulator and asking for their guidance.
Waiving the debt usually isnt an issue, but you must make sure you arent violating the asset lock regarding transferring the assets over to you. It seems clear that you have been supporting the CIC so I imagine it is just a case of getting the paperwork right.
Its never easy to make the decision to close, especially when you are making such positive social impacts.
I'd echo Heidi's suggested approach (having used this in the past myself);
however, as John has flagged up, it's important that there be some documented paper trail between the CIC and yourself that shows it's debt to you for the sake of transparency and probity (especially when dealing with regulators...)
Thank you all very much for your replies.The whole CIC thing has been very depressing, as I am sure that this would have really taken off if grant awarding bodies in the education field were willing to suppport a CIC. The research has been the critical area where I needed financial support, I did manage to get schools to carry out evidence gathering from more than 2,000 pupils in almost 50 schools across England (with incredibly impressive results particularly for pupils in the bottom 20% of performance), but the logistical side of this was financed out of my own pocket. I applied for numerous grants, but was always told that CICs were excluded.
I will write to the Regulator, thanks, John, I was already thinking along those lines.
The debts to myself have arisen by my having paid all the set-up costs for the company, also I paid the first year's worth of the development costs for the resources we sell to schools and researching their impact (the lion's share of the cost). This has been clearly documented in the accounts submitted each year to Companies House, and in our CIC Board meeting minutes.
There is also outstanding unpaid salary to myself, which I can simply write off.
I am interested in finding out why a CIC was not eligible for the grants you were applying to? Who were these funding bodies and what were their reasons as to not supplying grants to CICs as a whole? Who were they willing to supply grants to? Charities? Individuals?
I am saddened to hear of your story. I have been a teacher for 11 years and know how challenging it is finding strategies that improve performance of students (particularly those that struggle within the education system). Everyone wants results NOW and no one is prepared to put money into the research that is needed in order to be more strategic with a more meaningful and long-term approach to success.
Good luck and I do hope that the good work you have done, can continue to benefit young people.