Heathside Preparatory School: Administrators’ report reveals scale of school debts
PUBLISHED: 10:12 22 August 2019 | UPDATED: 10:41 22 August 2019
The ex-owner of a Hampstead private school shut down with hundreds of thousands in unpaid income tax, an administrators’ report has revealed.
Heathside Preparatory School was bought by Dukes Education this summer after its parent company of 27 years, Remus White Limited, went into administration.
It followed a litany of issues at the school from 2017 to 2019 that led to a pupil and teacher exodus, reported by the Ham&High in April.
A 75-page report filed by joint administrators FRP Advisory LLP was published on Friday and for the first time indicates the colossal debts racked up by the company before its collapse in May.
According to information provided by the sole owner and ex-headteacher Melissa Remus, the company owes almost £3.2m to 127 unsecured creditors, of which £2m is made up of deposits paid by former parents.
The deposits were paid to secure children's places at the school and were supposed to be repaid at the end of their last term.
Remus White Ltd also owes £204,000 to HMRC in income tax and national insurance, £198,000 for a pension loan and £38,883 to Legal & General for staff pensions, as well as hundreds of thousands to other suppliers.
In their report, administrators warned that the total number of creditors could be much higher, and made plain that it is unlikely any of these groups will ever see their money back.
They wrote: "To date the IP [insolvency practitioner] is aware of circa 500 preferential creditors.
"It is currently estimated that there will not be sufficient funds available to make a distribution to unsecured creditors." Many parents pulled their children out of Heathside after two highly critical Ofsted reports in 2018, and the revelation that the school had been offering GCSEs without Department for Education permission.
One parent wrote to the school in May in a letter shared with the Ham&High, demanding their £5,000 deposit back.
They wrote: "We sent many emails to the school asking for our money but we were always ignored.
"We even went to the school [and] asked to speak to someone but were ignored. We felt that we have been treated really badly."
Most of the £5.6m Dukes paid for the school in July will be used to pay off £4.7m in charges by Barclays Bank.
Administrators will then be faced with the mammoth task of establishing how far Remus White Limited's record of debts is correct.
In the meantime, scores of smaller businesses and suppliers are likely to be left out of pocket.
They include a Cambridge-based teaching agency ostensibly owed £30,000, a chess service owed £7,496, an investment company owed £132,000 and a small contract caterer left in the lurch to the tune of £55,000.
Paul Dillon Swimming in Hampstead has provided swimming lessons to pupils at Heathside for about eight years.
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A spokesperson claimed PDSC Ltd was owed just over £7,000 - twice the £3,750 stated on the creditors' report.
She said: "When we didn't get paid we thought they were just having another disorganised phase. It's quite a big issue for us."
In contrast, North London Catering Equipment Ltd in Finchley said it was only owed about £1,000 for work on the kitchens - not the £3,081 that Remus White's records showed.
Director Linda Gould said: "Fortunately we are strong enough that it's not going to put us out of business but I'm not over the moon about it."
Another creditor is Hayes firm BM Coaches and Rentals Ltd, which is apparently owed £23,275.
A spokesperson confirmed it had supplied Heathside with two drivers for three years, and that the school had had two 63-seat coaches at its disposal throughout.
According to the initial report, Heath Street Baptist Church is also owed £23,333 and Powerleague in Mile End is owed £6,200.
FRP Advisory LLP also advised Ms Remus in late 2018.
At the time, it said: "The director believed that the school could trade through its issues but this was not possible from May 2019."
In its schedule of works, it noted part of the task would involve "consideration of whether any matters have come to light which require notification to the Secretary of State or National Crime Agency."
Melissa Remus: 'Not the route I would have chosen'
Former Heathside headteacher Melissa Remus told the Ham&High in response to the administrators' report this week: "After an incredibly difficult year, I am delighted that our wonderful school is safe and look forward to a bright future for the pupils and staff.
"I am deeply saddened by the fact that the school I had built over 26 years was put into administration.
"Heathside was a very successful and happy primary school; there was a huge demand for a secondary school based on a similar ethos and culture. Unfortunately, opening the High School was ambitious.
"I worked night and day to find investors and a solvent solution - but, in the end, the bank took over the process.
"However, I am delighted the school and all the pupils and staff will thrive as the school moves forward.
"I am unable to comment on the details of the creditors as the administration process was handled by a third party. I am deeply upset for any creditor who has not been paid, and this absolutely is not the route I would have chosen.
"Aatif Hassan and Dukes have been extremely helpful, setting us up for a positive and successful future. I am extremely grateful for this support of our school.
"I received nothing for the sale. This has been personally financially ruinous, but my absolute priority was to steer the school to safety; I am enormously relieved that Heathside is now in safe hands with solid investment behind it and new owners who are committed to maintaining the original ethos of Heathside, which was always all about happy children and academic excellence."