Llangollen Railway

Indeed.


Someone mentioned things 'growing organically', & that's where the risk is.
They've got to a situation where Engineering has ~30 employees, that's a sizable operation.
It was 20 in 2014, when there was also an operating loss. 20 in 2010, when there was a loss.
The 2018 accounts state that engineering turnover was significantly down, yet staff numbers had gone up to 31.


The figures for Engineering aren't split out, so difficult to tell if it was ever a viable business.
I would wonder if the volunteer Directors had the capacity & skills to operate two quite different businesses.

 

While that is a fair comment in isolation, it appears from the company's announcement that over £250,000 of liabilities are claims against the engineering business, which one might reasonably interpret to be claims which have not been settled and are unfunded by the bank or anyone else. Which really goes to the point of separate incorporation, to protect the main operating company from major shocks. Now there may have been good reasons for not putting it in a separate entity but prima facie it would have provided some shelter to the PLC.

 

Absolutely...

 

True, but then someone has to control the new entity and it has to be funded. All structures have their advantages and disadvantages. And what existed at the Llangollen cannot be retrospectively changed.

What would be useful to know (although I have no right to know as I'm not a share holder or member) is who owns/owed what.

 

So is this just a tactical winding up, they can't pay the settlement fees so they have no option but to wind the plc up? Not an uncommon thing to do but does leave a nasty taste in the mouth for those who lose out.
No PI to cover the engineering business against these sort of claims?

 

Oh dear this is sad reading. I repeat, I hope and believe something can arise from this sad situation ..the potential is there. Hopefully some group with vision realise this with sound business grounds...remember it's a business not a railway.

 

It can't be both tactical and because they have no option.

 

You have to worry the engineering side troubles will ripple across to the actual railway side of things in that donations and public confidence in pledging donations will dry up causing the slow death.

We’ve already seen warnings of be careful where any donations are actually going etc, can we be 100% sure donations won’t go directly to paying the debts incurred and not support the railway? Is if just safer from a confidence point of view to simply not donate at all until it’s all sorted out, one way or the other.

This doesn’t happen overnight, each nail in the coffin has been hammered home over several years, if the railway closes and the track ripped up then the management who’s job it is to ensure the ongoing ability of all aspects of the railway to operate in the green have failed so it’s only them who are to blame.

I really can’t see 2021 ending without a Big name going out of business unfortunately, the WSR appear to have dodged that bullet - but will the LR?

 

Yes, mostly from you!

As long as you donate to the Trust, then yes, I think you can.

 

To a certain extent it can be. The total organisation (Trust, PLC, Engineering) has total liabilities which possibly exceed the total value of the assets, and certainly exceeds the value of the assets which aren't needed to keep the railway running. They probably have no option but for at least some of the organisation to go bump. However rather than lose the assets of the trust they are letting the PLC go under, losing any assets it has, and thus escaping all the liabilities - this is to a certain extent a tactical decision, the ability to do which goes back to when the PLC was created. One of the reasons a lot of railways use this structure is to shield their assets in the trust from the results of commercial failure.

 

A note to all of the doom-mongers out there. The track is safe and the railway should be able to operate within a couple of months. The L.R.O. and T.W.A.O. held by the Trust allows the railway to operate Any donations to the Trust will be gratefully received, as will any new volunteers.

Bob.

 

A quick look suggests that monies going to the Trust should be okay. They don't appear to be a guarantor of the plc.
(however, as at the end of 2019 they did owe the plc money, if that is still the case the receivers may choose to collect it)

 

Yep, it is the Trust that owns the trackbed etc;
https://find-and-update.company-inf.../03040336/charges/AjSdcu_5yGA6qfD-h3u4rhTGiTg

 

From a number of forums, ive asked the question once prior to this message.

How do we know the trust isn’t going to be dragged into this mess, or is in trouble as well?

 

Doom mongers or realists, “should be able to operate” ?

I think potential donators have a right to be worried in the light of other railways who have been on the edge or have rather loose understanding of how to run a happy and financially sound business, note business not private train set.

 

It is the plc's bank that have called in the receivers.
NOT the plc or the Trust.

Tactical would be the plc calling in administrators

 

Wasn't one of the directors the GM so surely someone who should have had their eye on the ball about what was going on day in day out on the line?

 

It was reported as the PLC asking the bank to call in the receivers.

 

You can look at the Trust's accounts
https://find-and-update.company-information.service.gov.uk/company/03040336/filing-history

They are solvent & generate cash.

 

It's a phrase they are told to use by the bank, so as to make it appear it isn't the bank taking the action.

"Usually the bank (bizarrely) requires the directors to "request the bank to appoint a receiver". This is face-saving, and designed to deflect criticism from the bank to the directors."
https://www.companyrescue.co.uk/guides-knowledge/what-is/what-is-receivership/