The report, prepared by administrators KPMG and filed to the Australian Securities and Investments Commission on Monday, said it had been difficult for Carriageworks to pare back project costs once initial commitments had been made or partnerships formed.
“For certain projects, with the benefit of hindsight of the eventual performance, the company would not have committed to the project at the level it did,” the report said.
The report outlined pledges and loans from wealthy philanthropists including $600,000 to unsecured creditors, who are mostly suppliers, and a further $1 million upon the venue’s resumption of trading to give management a financial buffer.
Geoff Ainsworth and wife Johanna Featherstone have pledged $2 million through their philanthropic Oranges & Sardines Foundation. Most of the money will be given as a low-interest five-year loan, upon which Carriageworks can drawdown for working capital.
The Neilson Foundation has pledged $500,000 and the David Gonski Foundation $200,000, most of the latter to kick in over four years once Carriageworks has resumed trading.
The Crown Resorts Foundation and Packer Family Foundation have promised Carriageworks $240,000 for the continuation of the Solid Ground Project, a partnership between Carriageworks and the Blacktown Arts Centre which pairs artists and school children.
The bailout will require a long-term lease to be signed with Create NSW which owns the Carriageworks’ site. A 45-year lease had been in draft form before the organisation collapsed.
KPMG has recommended that creditors accept the proposal to lift the venue out of administration, pending confirmation that the long-term lease has been secured and that Create NSW will renew its major grant from 2021.
Without these commitments, the company would be wound up, employees paid five to 28 per cent of their entitlements and unsecured creditors nil.
With agreement, Carriageworks’ employees would be guaranteed their entitlements and unsecured creditors would receive between 25 and 37 per cent. The company would likely resume with a less risky artistic program.
The report found that due to its limited assets and reliance on grants and donations, Carriageworks had “limited buffer to respond to severe financial shocks such as the impact of the COVID-19 pandemic”.
Carriageworks had an operating profit in 2017 and 2018, but had a loss of $524,000 in the 2019 calendar year off the back of the underperforming artistic projects. It was also on track for an operating loss of $292,000 for the latest quarter due to softening commercial conditions.
Creditors will vote on June 9. Create NSW said it would continue to explore options as it worked to secure the venue’s long term sustainability. Carriageworks has already received its government funding for 2020.
“Future annual NSW Government funding for Carriageworks Ltd is subject to contracted terms and timeframes,” the government spokesperson said.
Linda Morris is an arts and books writer at The Sydney Morning Herald