The operators of Wellingborough’s Castle theatre were placed into administration following the loss of its contract with Wellingborough Council.
The authority terminated its contract after uncovering the state of the charity’s finances, including a £500,000 pension black hole.
The Northants Telegraph has since been contacted about one amateur dramatic group which claims it is owed money and said non-payment could leave them facing bankruptcy.
Fears have also been raised on the Save The Castle, Wellingborough Facebook page about societies going bust because of the current situation and asking whether the council could or should step in to help if the administrator can’t turn things around.
One post says: “These local societies could do with direct financial support since it is feasible their monies will never be returned to them.”
In response to the fears raised, a statement from administrators PBC Business Recovery & Insolvency said: “The joint administrators and their team have received many communications from various parties who have been left with an unpaid debt.
“Each one has a personal story, whether that is financial hardship as a result of the administration or simply frustration based upon feeling their trust (that they will be paid) has been betrayed.
“That is an unavoidable consequence of insolvency, irrespective of the procedure adopted.
“Any liability that was caused or created prior to the relevant date of the insolvency (13 April 2016 in the case of The Castle (Wellingborough) Limited – in administration) is a creditor claim in the insolvency where statute provides a strict order of priority for payments.
“No preference can be shown to any individual (or category of) creditor irrespective of how the liability arose.
“The council have acted in good faith and adhered to their obligations under the terms of the trading agreement between them and The Castle in so far as injecting annual maintenance funds.
“Indeed, the decision made by the council on 22 March 2016 was as a direct concern over the financial viability of the company.
“That concern has been proven right, which is of no consolation to creditors.
“To ask the council to subrogate creditors is no different to asking the taxpayer to adopt the risk inherent with any trading relationship and that gives rise to questioning why the taxpayer should accept such liability.
“One duty of the joint administrators is to review the conduct of the company officers in accordance with the Company Directors’ Disqualification Act 1986 and whether any personal liability arises.
“These investigations take place ‘behind the scenes’ and anyone interested in the administration are invited to provide evidence that may assist those enquiries.
“In the meantime, the council and joint administrators are working closely together in order to secure the best resolution for The Castle going forward and for creditors as a whole.”