Published: 17:00, 13 January 2017
Some creditors owed £5.2m by Dreamland are unlikely to get all their money back, administrators of the Margate attraction have warned.
A progress report by administrators Duff and Phelps published today places a question mark over the claims made by some creditors because of the ongoing financial challenges facing the business, which went into administration in 2015.
It says: “Based on the current information it is uncertain whether there will be significant realisations to enable a dividend to the non-preferential unsecured creditors of the company.”
It says any money unsecured creditors will get would be under what is known as the “prescribed part”.
Under insolvency law, non-secured creditors are eligible for a share of 50% of the first £10,000 of assets and 20% of the balance up to a total of £600,000.
Many of those companies who are owed money are small local businesses and suppliers.
The £5.2m includes £2.9m to what are described as “connected creditors” and £1.6m to “trade and expenses creditors".
A further £680,000 is owed in tax to HRMC and £11,224 to employees.
There could also be further claims over the Scenic Railway. Duff and Phelps say they are looking at a compensation claim over the closure of the ride from July to December last year.
"Many of the unsecured creditors are small local companies who will find it very hard to survive if Sands Heritage fails to pay its debts to them...” - Ian Driver
Their report states: “The joint administrators are also looking at submitting a loss of earnings claim for the period during which the Scenic Railway was closed.”
The report states that the park's operator, Sands Heritage, had an operating deficit of £1,067,939m during its first six months in administration.
Bad weather and the long-term closure of the Scenic Railway during the 2016 summer season are cited as the major causes for this loss.
The report recommends that Dreamland continues to operate until 2017 to secure a better dividend for those owed money.
However, it adds the company’s financial performance is dependent on “substantial investment in the park over the winter months”.
That is to be funded by Arrowgrass Master Fund which owns 31% of Sands Heritage shares and who recently extended their loan facility to Sands Heritage to £10million.
Former Thanet Green councillor Ian Driver renewed his call for a public inquiry.
“This is devastating news. Many of the unsecured creditors are small local companies who will find it very hard to survive if Sands Heritage fails to pay its debts to them.”