Troubled M&D's theme park abandoned plans to furlough over 160 staff in favour of redundancy

It has put a new management team in place just eight weeks after calling in the administrators.

On April 23, over 160 staff were made redundant and left without wages when the theme park went into administration.

The move, just before payday, angered staff who posted on social media that they were expecting to receive furlough payments.

Executives have posted on their Facebook page to their 81,000-plus followers that they are getting ready to re-open “when restrictions have been lifted.”

Papers lodged by the joint administrators Michelle Elliot and Stuart Robb of Leonard Curtis Business Rescue and Recovery reveal that the group's workforce had originally been furloughed in March 2020, after the closure of the theme park and hotel.

It came after the M&D group filed a notice of intention to appoint administrators on February 25 while under threat of a winding-up petition by the taxman, for a £416,000 debt.

The documents further state the group considered whether use of the Coronavirus Job Retention Scheme (CJRS) would "allow them to trade on out with insolvency".

READ MORE: M&D's theme park goes into administration

It concluded this was not possible due to the "lack of available cash flow funding to pay the staff wages (before CJRS reimbursement from HMRC) and the ongoing holding costs for the theme park and hotel on a mothballed basis" including security, insurance, utilities and the PAYE/NI payable of furloughed wages.

Tax liabilities alone under CJRS were estimated at £110,000 a month.

The assets were bought by Lochview Theme Park (Scotland) Ltd, Bizarre Bar Limited and Leisure Management (Scotland) Ltd, connected to the Taylor family, after an original bid in March, before M&D's went into administration.

Monday's announcement came on social media. The post said: "We are delighted to announce that Scotland's Theme Park has been bought out of administration and has new management in place.

"In line with Scottish government guidelines, we are working hard behind the scenes to be able to reopen Scotland's Theme Park as well as Devil's Island Adventure Golf, and Amazonia when restrictions have been lifted.

"We are working within the physical distancing guidelines as outlined by the Scottish government, as well as introducing additional hand sanitising stations located throughout the park and Amazonia and look forward to welcoming you back in the near future."

However many comments under the announcement were expressions fury at treatment of the staff who were made redundant.

Last year the owners were fined £65,000 for health and safety breaches after a rollercoaster derailed in June 2016.

Seven children were among nine people injured when five gondolas plunged 30ft to the ground.

The administrators were approached for comment.

In April it was confirmed by the government that companies in administration were eligible under the job retention scheme if there was a reasonable likelihood of rehiring the workers – for example, if it was to be sold to another party to continue trading.

A High Court judgment in April revealed that there was greater flexibility around how administrators should apply the job retention scheme for employees whose employer has begun insolvency proceedings.

It came after administrators for Italian restaurant chain Carluccio’s, which went into insolvency on March 30 sought clarification around how the scheme could be approached while maintaining compliance with the law.

Carluccio's fell into administration at the end of March following the forced closure of the restaurants due to the Covid-19 outbreak. The High Court judge heard that the administrators plan to "mothball" the business while seeking a buyer.

The High Court ruling extended the time limit for the administrators of Carluccio's restaurant group to furlough its employees.

On April 30, Carluccio’s employees received a letter from administrators offering to continue to employ them on varied terms so that they could take advantage of the CJRS and claim back 80% of their wages from the government.

The letter said the company did not have the money to pay their wages now, but said that as soon as the funds were received by the government it would be able to pay them for furlough.

The "overwhelming majority" of Carluccio's approximately 2,000 employees consented to being furloughed, with 80% of their salaries, up to £2,500, to be passed on when received through CJRS. However, no response had been received from 77 people.

In their case before the High Court, the Carluccio’s administrators – FRP Advisory – were concerned that they would have to make the 77 people who had not responded within 14 days of the letter redundant. Under insolvency rules, administrators normally have to dismiss workers within 14 days of their appointment in order to avoid liability for their employment and wages.

However, in the absence of government guidance on the issue, the High Court ruled it was in the interest of the company and its employees to allow the administrators to extend this 14 day period to allow staff who had not yet agreed to the alteration of their contract to consent to the changes so they could be furloughed.

The court also confirmed that in his view the administrators were eligible to access the scheme on behalf of the casual dining chain's employees.

Mr Justice Snowden said that employees who object to the change in terms or do not respond to the letter will be treated as “unsecured creditors” of the business, which means they would be among the last to be paid during an insolvency process.

He said: “The scheme guidance is explicit that the amount of the grant is to be paid into the employer’s bank account and is to be accounted for as income by the employer. As such, any grant monies paid will constitute assets of the company in administration.

“Under the insolvency legislation, administrators are not free to dispose of the assets of the company in administration as they see fit, but must do so in accordance with the insolvency legislation and, in particular, by making payments in the order of priorities prescribed in that legislation.”

The Unite union, which was also involved in the case, then urged Carluccio’s employees to respond to their letters or contact the administrators if they have not received one so the administrators can claim some income for them.

The union indicated that other companies that recently entered administration, including Debenhams, may also benefit from the judgment.