Hadlow College is set to become the first college to go through the college insolvency regime.
The Department for Education has confirmed it petitioned the High Court earlier this week for the college to be placed into “education administration”, under the insolvency regime created by the Technical and Further Education Act 2017.
The High Court is expected to respond on 22 May. Insolvency practitioners BDO are understand to have been lined up as the college’s administrators, should the insolvency be approved by the court.
Quick read: Three colleges served financial health notices
Hadlow College financial concerns
Financial health notices to improve were this week published by the Education and Skills Funding Agency for the constituent colleges of the Hadlow College Group: Hadlow College and West Kent and Ashford College.
In February, the group announced that it had suspended group principal Paul Hannan and his deputy Mark Lumsdon-Taylor, with Graham Morley appointed interim principal. The chair of West Kent and Ashford College, part of the group, also resigned.The college has been contacted for comment.
In March, FE commissioner Richard Atkins told Tes there was a “high risk” of a college insolvency within 12 months.
'Significant financial difficulties'
A spokesman for Hadlow College said: “In recognition of the significant financial difficulties facing Hadlow College, a petition was filed by the education secretary, on behalf of the college, for it to be placed into education administration. The objective of an education administration is to avoid or minimise disruption to the studies of the existing students of the college, and those who have enrolled, as a whole while securing the best outcome for creditors as a whole.
"Hadlow College will continue to operate as normal and courses will continue as scheduled. Qualifications will not be affected by this process. College staff will continue to be employed and we envisage no changes to staffing as a result of the appointment, in due course, of education administrators.”
A spokesman for the Department for Education said: “We can confirm that following a request from Hadlow College we have applied to the court to place the college in education administration. This is matter for the court and it would be inappropriate to comment further until a decision is made.”
'Exceptional case under new legislation'
David Hughes, chief executive of the Association of Colleges, said: "This is an exceptional case under new legislation which has never been used before. Because of that, everyone involved in this will be learning as they go, so it is more difficult than usual to forecast what might happen.
"We know that the Department for Education was providing exceptional financial support to Hadlow College to cover running costs and that the decision was taken to petition the High Court to place the college into educational administration.
"The court will decide whether to appoint an education administrator using the new college insolvency regime introduced by Parliament. The education administrator has a primary duty to protect the interest of current and enrolled students first, and then creditors so the normal activities in the college will continue in the short-term and students should hardly notice any difference.
"That is an important difference to straightforward commercial insolvency and students and their families as well as staff should be reassured by that."