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The Rayners Special Educational Trust trading as Penn School (the “School”) and the Penn School Limited (both in Administration)

The School was placed into administration on 7 July 2015, with Lee Manning and Matt Smith, both partners of Deloitte LLP, appointed as Joint Administrators.

Penn School Limited is a dormant company and has no role in the day to day running of the School.

The affairs, business and property of the School are being managed by the Joint Administrators. The Joint Administrators act as officers of the court and act as agents of the School contracting without personal liability. The Joint Administrators are authorised by the Institute of Chartered Accountants in England and Wales. All licensed insolvency practitioners of Deloitte LLP are licensed in the UK.

Following their appointment the Joint Administrators made the difficult decision to close the School at the end of the current term, however would like to take this opportunity to reassure all parties that the School will remain open as usual until then.  We are having to close it because there are no funds available to enable continued trading beyond the end of this term, as the school is expected to be heavily loss making due to the fall in expected student numbers.

The Joint Administrators and staff have been approached by a number of parents and employees with questions during the past 24 hours, and will continue to update this list of commonly asked questions as appropriate.

Q:         What is Administration?

A:         An administration is an insolvency process as defined by the Insolvency Act (1986) (as amended) whereby an licenced insolvency practitioner is appointed to manage the business and assets of the School.

 

Q:         What is the role of the Joint Administrators?

A:         The Joint Administrators have various functions and responsibilities but must perform these for the benefit of creditors (including employees) with the objective of rescuing the School or, if not possible, achieving a better result for creditors than winding up of the School.

 

Q:         How can I contact the Joint Administrators?

A:         If you are an employee of the School, please use the below email address:

hsolway@deloitte.co.uk

 

If you are a parent or guardian of one of the School’s pupils, please use the below email address/telephone number:

            ukdeloittepennparents@deloitte.co.uk / 020 7303 5468

 

If you have any other queries, please use the below email address:

 

bwithington@deloitte.co.uk

                 

Trustees Question & Answer Document

Why is the school being shut?

The school was placed in special measures by Ofsted in May 2013; since then, pupil placements have fallen considerably. Local authorities are not allowed to send children to non-maintained schools in special measures unless there are exceptional circumstances.

Simultaneously, costs increased because the Trustees had to invest in necessary improvements to the school. Unlike maintained schools, non-maintained schools in special measures are not given financial assistance from the government to try to improve their rating.

In April 2015, the Trustees were informed that pupil numbers for the coming Autumn term were due to drop to 50. This meant the school was not financially sustainable. The charity had no cash reserves, only funds to cover operating costs.

How did the school’s non-maintained status affect its finances?

Non-maintained special schools receive no state support; they charge fees on a non-profit making basis. Most non-maintained special schools are run by major charities or charitable trusts; Penn School was run by a registered charity, the Rayners Special Educational Trust.

Penn School was dependent on its income from individual local authorities, which placed students at the school, and from donations or fundraising activities carried out by volunteers.

The charity has run the school since purchasing it from Camden Council in December 2001 to prevent it from being closed. Funds were raised by way of a charge against the property.

Why was more not done earlier to resolve the school's financial problems?

Financially, the school has always existed on an extremely tight budget and the Trustees have previously investigated a number of ways of securing financial assistance, including commercial loans and grants, as well as through fundraising. However, most grants cannot be put towards operating costs.

In the last two years, considerable efforts have been made to reduce operating costs, but in a special needs education environment additional support and classroom staff are required for the pupils to avoid a detrimental impact on their education.

Why was a professional fundraiser not appointed?

The Trustees employed a fundraiser on a short-term contract, who was unable to secure funds. Though they discussed appointing a full-time professional fundraiser, it proved impossible on cost grounds.

What other fundraising activities took place in recent years?

A fundraising committee worked in conjunction with the Friends of Penn School for the last three years, but funds raised were typically put towards specific resources and activities required by the school, such as new computers, at the request of donors. They did not go towards ongoing operating costs.

Are Penn School’s finances publicly available – and are they audited?

Yes. The charity’s accounts are audited every year and are publicly available. The school has run at a loss for well over a year.

What options did the Trustees pursue to keep the school open?

All viable turnaround options were looked at, including negotiations with various third parties for additional funding and sale options. Other initiatives included seeking a guaranteed increase in pupil numbers from the school’s main stakeholders or converting to academy status. The Trustees also lobbied politicians, but the school’s non-maintained status meant it was not eligible for state aid.

Why was the accountancy firm Deloitte brought in by the trustees in May?

The Trustees met Deloitte LLP for the first time on May 21st. The company was brought in to support the school’s management in producing official and externally validated financial forecasts, for both short-term cash flow and a two-year forecast. They reported that the school would run out of money by November 2015. Deloitte LLP was then instructed to identify potential buyers and carry out contingency planning.

When was the decision to close the school made?

The decision to place the charity into administration was made on July 6th 2015 after discussions about the timing with Buckinghamshire Local Authority, the Education Funding Agency and other key stakeholders. The Trustees wanted as much time as possible to explore turnaround options, but also to give pupils time to secure places in other schools for the autumn term.The Trustees appointed Lee Manning and Matt Smith, partners of Deloitte LLP, as joint administrators on July 7th, 2015.

Why were parents not told sooner?

The Trustees were aware of the very difficult financial situation in late April, but were still trying to find ways to keep the school open. Had the Trustees gone public earlier with their concerns, some parents might have removed their children, making the school’s finances even more perilous, and thus impossible to attract prospective buyers. At this point, there were potential buyers; sadly, they subsequently pulled out.

How does the insolvency process work?

Licensed insolvency practitioners have been instructed to manage the business and assets of the charity. Under the terms of the Insolvency Act (1986) they must act for the benefit of creditors, including employees, with the objective of rescuing the school. If this not possible, their duty is to achieve a better result for the creditors than winding up the charity.

What is the role of the Trustees now?

The Trustees no longer have a role in running the school, but are providing any assistance the administrators require to help them with their remit.

What happens next? What is the role of the administrator?

The administrators will talk to any interested parties who might want to buy the school, but have not yet received a viable proposal. Under the terms of the Insolvency Act, they are also required to publish a report explaining the situation to creditors within eight weeks of their appointment.

Will the administrators communicate with parents during this process?

If there are significant developments they will be communicated via the school’s website.

Is there still a chance the school could be saved?

The administrators will pursue every available option, but the school could only re-open as a financially viable business. The administrators are trying to find someone who will buy it as a going concern.

When will we get a final decision about the school's future?

There is no deadline; the administrators will act as efficiently as possible to resolve the situation, but parents should work on the assumption the school will not re-open and that they need to find an alternative school for their child.

What will happen to the school's staff?

The administrators are consulting with both the Trade Unions and the employee representatives with regard to ongoing matters affecting their employment.

How can I find another school for my child?

You need to contact your local authority, which is responsible for helping your child find another school.

What happens if Penn School is purchased by another education body?

In the case of a sale as a going concern, which is what Deloitte is exploring, it is likely that the purchaser would acquire the assets that they require to operate the school - for example its property and other owned assets such as the minibus and fixtures and fittings. The contracts of employment for staff would transfer to the purchaser; there is legislation that protects the rights of employees in these situations. They would then be in a position to operate the school, but would still need to discuss the placement of students with the local authorities.

In the event of the Administrators selling Penn School and its assets what would be done with any surplus funds?

In line with the formal memorandums of Association of the Rayners Special Educational Trust, if the charity has to be wound up or dissolved, after all its debts and liabilities have been dealt with there are specific instructions as to what should be done with the remaining funds.

The remaining funds must be put towards advancing the education and relief of people – principally children and young adults - who have communication difficulties associated with hearing impairment, language impairment and autism.

None of the Trustees or Governors of Penn School would benefit in any way from the sale of the School and its assets. All of the Trustees and Governors have worked on a voluntary, unpaid basis and have received no payment or stand to gain from the sale of Penn School and its assets.

If there was enough to pay all the creditors there would be no obligation to dissolve the trust, which could be restored.

 

 

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