Purpose

This report requests the
Executive Mayor to enter into a Letter of Comfort to
the Directors of Brick by Brick
Croydon.
 
A similar Letter of Comfort was
provided for the 2023/24 accounts and the
same is now requested for
2024/25 Accounts to cover a period of 12 months
beginning from when the
Accounts will be audited. The Company is now in
the process of being wound down
and is currently working towards disposing
of assets and settling
remaining liabilities.
 
The loan balance has not yet
been written off as the advice form legal is to
ensure this is done when all
activity has come to an end and this retains the
Council control over a large
balance of cash.

Content

RESOLVED
to:
 

1.   
Enter into a Letter of Comfort to be provided to
Brick-by-Brick Croydon Ltd, exercising the Council’s
shareholder function and acting as Lender.
 

2.   
Delegate to Corporate Director of Resources to sign
the letter on behalf of the Council.
 

Reasons for the decision

The November 2022 Brick by
Brick Croydon Ltd Update Report to the Executive Mayor in Cabinet
delegated to Corporate Director of Resources to enter into a Letter
of Comfort to be provided to Brick by Brick Croydon Ltd, under the
Council’s shareholder function. Whilst this delegation was
generic it could be construed to relate to 2021/22 Accounts and in
order to ensure no ambiguity the Mayor’s direct decision in
consultation with the Corporate Director of Resources is
sought.
 
A substantially similar letter
of comfort is recommended to allow BBB to remain solvent whilst
wind down activities continue and recommendations within the Brick
by Brick Croydon Ltd Closure Report to Cabinet in February 2024 are
progressed.

Alternative options considered

The Council could consider not
issuing a letter of comfort, however this would create direct risk
for the Council, as Directors of the BBB Board would not be able to
operate as a going concern. The Board will be forced to place the
company into insolvency which would jeopardise the Council’s
ability to secure and control cash flowing back under the loan
facility agreement.