INSIDE SUTTON: Four sister companies of the firm behind Sutton’s council-backed cinema have gone out of business in quick succession.
BERTIE WORCESTER-PARK does what he heard them say in the movies, and follows the money…
Gone to the pictures: this is what £2.4m of public money has bought the people of Sutton
Though it claims it is “business as usual”, there are serious questions hanging over the future of the Throwley Yard Cinema in Sutton, the last surviving venue in the portfolio of its parent company, Really Local Group Ltd.
Sutton Council has almost £1million of public money invested in the cinema, having granted a 15-year lease to Really Local Group. Really Local Group also received £1.42million in grants through the government’s Future High Street scheme towards the project. The private company behind the venue, meanwhile, committed a relatively modest £100,000 to the Sutton cinema.
The four-screen cinema, off Sutton High Street, was officially launched last September in a ceremony attended by LibDem council leader Barry “Basher” Lewis. Inside Sutton has not been able to confirm reports at the time that Councillor Lewis expressed his disappointment that he was not to enjoy a screening of his favourite movie, Rocky.
But “Basher” did go on the record to state: “Throwley Yard will become another go-to cultural destination for all Sutton residents and visitors.” Oh dear…
A council press release issued at the time said that the Really Local Group was “known for their successful projects in London”.
This week, two of Really Local Group’s cinemas, in Reading and in Sidcup, entered voluntary administration. This follows the failure of their cinema in Ealing last September.
According to documents filed at Companies House, Reading’s Biscuit Factory cinema has debts of £2.2million, while the Storyteller cinema in Sidcup owes nearly £400,000.
Warning signs: another council-backed cinema, Catford Mews, is at the centre of a dispute between Lewisham and Really Local Group
The Ealing cinema, trading as the Ealing Project, entered liquidation owing more than £1.9million.
Petitions to wind up the Reading and Sidcup cinemas were presented to the High Court in November by 365 Business Finance Ltd, which was owed more than £200,000.
Reading, Sidcup and Ealing cinemas are continuing to trade, however, as is possible in administration as liquidators seek to maximise returns for those owed money by the businesses.
Meanwhile, the group’s Catford Mews cinema was closed down by Lewisham Council in October, with the council claiming it was owed £650,000. Really Local Group Ltd disputes this. The Catford subsidiary company is not in liquidation, but its last declared balance sheet deficit of around £495,000 is not a promising sign.
Three other group companies with cinema projects are on hold or planned, in Canning Town, Bermondsey and Nuneaton, while a company operated by Really Local Group Ltd, Peckham Levels, went into administration last August owing nearly £5million.
Publicly available documents show the insolvent company behind the Ealing cinema, Really Local Group (Broadway) Ltd, is likely to be operating under a company outside the Really Local Group, but owned by that company’s managing director, Preston Benson.
Benson set up three “special purpose vehicle” companies last May, under his personal ownership.
Raging Bull: council leader ‘Basher’ Lewis (right) together with Preston Benson (with mic) at the formal opening of the Sutton cinema last September
Benson stated on the public record, in The Gazette: “I give notice that it is my intention to act in one or more of the ways specified in section 216(3) of the Insolvency Act 1986 in connection with, or for the purpose of, the carrying on of the whole or substantially the whole of the business of the insolvent company under the following name: RLG SPV Gamma Ltd T/A Ealing Project.”
This has the appearance of a “phoenix” move, where a heavily indebted business is closed down but its owners or directors re-emerge soon after, running another company that appears very similar, while leaving many of their previous company’s creditors out of pocket.
Benson resigned as a director of his own company, RLG SPV Gamma Ltd, as soon as the original company went into liquidation, then was reappointed as a director just as this statement was issued.
‘Open as usual’: Throwley Yard’s statement earlier this week
Companies House filings show that most of these operations owed money to the parent company, Really Local Group Ltd, totalling at least £2.2million, effectively wiping out the parent company’s balance sheet of around £1.7million. Its balance sheet is shored up only by £2.6million in private investment.
The company’s accounts are three weeks overdue for filing with Companies House.
Really Local Group Ltd is the financial guarantor for the cinema in Sutton.
Benson, the Really Local Group’s founder, has issued a statement saying, “This step marks a pivotal moment in securing the future for these beloved spaces, which have become vital hubs for their respective local communities. The decision to restructure follows a difficult period for the business, driven by global challenges.
“The Really Local Group remains committed to its founding vision, and the restructuring aims to ensure the sustainability and growth of its venues in the long term.”
On Monday, the Throwley Way cinema issued a statement of its own saying it was “business as usual”. But the award of the contract and 15-year lease for Throwley Yard to the Really Local Group Ltd was itself not without controversy.
At the February 2022 meeting of Sutton Council’s strategy and resources committee, where the deal was approved by the LibDem councillors, concerns were expressed about the contract. Sutton was then investing £975,000 alongside £1.42million from the Future High Street Funding scheme.
Conservative and independent councillors questioned whether the new cinema really would be “art house”, or would be screening Hollywood blockbusters and compete with the then-Vue cinema in Sutton, undercutting its prices through public subsidy.
Others questioned whether the £100,000 from Really Local Group constituted a genuine commitment. Requests to see the new cinema’s business plan were voted down by the LibDem majority on the committee.
According to Ruth Dombey, the then council leader, there was “sufficient track record” in Really Local Group “to give us confidence to go forward”.
Cinema fan: Sutton Council finance director Richard Simpson
The scheme had been brought to the council by Sutton’s finance director, Richard Simpson – who is now subject of a formal complaint to his professional body by his previous employers, Croydon Council. Simpson told the committee, somewhat cynically, that even if the cinema venture failed, the council would still have a refurbished asset.
By June 2023, the budget for the cinema had increased by £600,000, at nearly £3million. Really Local Group requested that its modest £100,000 capital contribution be converted into higher rent payments of £105,000 a year, rather than the £80,000 agreed.
It all added further pressure to the business. But no alarm bells rang at Sutton Civic Centre.
Throwley Yard cinema’s six-month rent-free period (yep, they were handed a freebie, as well) has now ended. Thousands of pounds of rent is due to be paid to the council.
But with its sister companies collapsing and its parent company facing huge losses on its inter-company loans, the future of the Throwley Yard cinema may be hanging in the balance.
Read more: Sidcup Storyteller cinema to stay open after Catford Mews firm pulls out [from the Greenwich Wire]
Read more: Sutton staff kept Kingdom revenue deal secret from councillors
Read more: Council hired ‘Real’ builders and dodged Grenfell grants ban
Read more: Negrini doctored specialist reports and withheld finance details
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This’ll be the reason why they have gone from showing genuinely interesting arthouse films to just showing the same generic slop as all the multiplexes, only in less salubrious surroundings.
Throwley Yard is a very pleasant venue, and I for one will continue visiting as often as possible to help it thrive. And no, I’m not affiliated with Really Local Group – although I do have a (very reasonably priced) membership with the cinema!
Any business can provide a “very pleasant venue” with £2million of subsidy, or more, paid for by ratepayers.
That doesn’t make it a well-run business, nor even a decent investment by the local council.
Indeed, if the business is badly run, it makes it an irresponsible use of public money. Which is really a more significant point than whether your cinema membership is very reasonably priced.