TRANSEUROPA OUTSTANDING DEBT

Thanet District Council will take whatever action it can to recover £3.3 million outstanding debt owed following the collapse of Transeuropa.

That’s the message following a Cabinet meeting at the council last night (Wednesday 29 May).

Although the debt has been logged with the company administrators, members have agreed a number of funding proposals to ensure that the debt is covered in full from within the current year’s accounts – in line with good accounting practice.

The following sources of funding were agreed by Cabinet:

• A sum of £1m has been identified through additional grant income that has arisen following an assessment of the previous years’ housing benefit subsidy which is not needed to meet this or future years’ subsidy payments;
• Unallocated unringfenced grants of £92k have been identified;
• A balance of £43k remains on the Housing and Planning Delivery Grant reserve which is unallocated;
• A sum of £1m will be drawn down from the New Homes Bonus;
• Savings in the cremator project of £196k will be utilised;
• Carry forward budgets of £257k from prior years have not been needed and will therefore be taken to offset this debt;
• A sum of £200k will be taken from the Priority Improvement Reserve which will still leave a balance of £405k to support invest to save and one-off initiatives;
• A sum of £198k will be taken from the VAT Reserve (the balance that remains is felt to be sufficient);
• The bad debt provision has been reviewed and a sum of £200k can be taken to contribute towards this debt.

The above funding sources give a total of £3,184 million. It is anticipated that the balance of the outstanding debt could be covered by the council’s underspend for 2012/13.

Chief Executive of Thanet District Council, Dr. Sue McGonigal provided an update to members at the meeting.

She said: “The council agreed to provide temporary financial relief to Transeuropa to support the continuation of a ferry service from the Port of Ramsgate. This support was in the form of an agreed payment plan for the company’s berthing fees, alongside our counterparts in Ostend and other creditors. At the time of the agreement Transeuropa had given assurances that a financial investor was in place and that this repayment would be made in full through installments.

She continued: “Let’s be clear, the council was forced to make a very tough decision. Had we acted earlier to recover the fees, there was a very real risk that the company would have folded, being unlikely to secure an investor. Without an operational ferry service at the Port, the council would face a huge loss of income with no guarantee of finding a replacement service.

“Understanding the port’s role as a vital economic asset for the district, the council chose instead to help support the continuation of the service from the Port with what we believed to be a robust repayment plan in place.

She added: “The council does not enter into any financial agreement without careful and detailed consideration of the risk. Although we’ve identified that the full amount of the debt can be covered from within existing council budgets, we will be doing everything within our power to recover the full amount owed.”