Last updated 15:42, Wednesday, 05 November 2008

THE firm that helped run Whitehaven’s Maritime Festivals from 2001 to 2007 has wound itself up, leaving creditors fearing they will be left penniless.

A Carlisle businessman called in administrators to wind up his company because of money troubles – then bought it back the same day without the debt.

The administrators have told The News that many firms and individuals in West Cumbria will have been left without money they are owed.

Event staging and installation firm Rhythm of Life, which sold whiteboards to 120 schools across Cumbria, has now become Rhythm Group.

It is not yet known how much Rhythm Of Life owed when it went into administration but accounts obtained from Companies House show that in March last year it had debts of more than £320,000.

Administrators PKF were appointed by Rhythm of Life director Garry Kerr on October 3.

The business and some of its assets were bought the same day by Rhythm Group – its director is Garry Kerr.

All staff were kept on and contracts are being honoured.

Rhythm of Life was registered as ROL Realisations Ltd.

Mr Kerr said the bank presented administration as the only alternative to drastically reducing the firm’s overdraft.

“Either we shut the doors and called it a day or took the option offered to us by the bank. From our point of view it was a good option.”

Mr Kerr cannot give a figure for Rhythm of Life’s final debts as they are still being calculated.

But he confirmed that creditors included other businesses, some of them local.

PKF must settle the bank’s claim first – if there is any money left it will be shared out between the other creditors.

Mr Kerr has been trying to re-establish relationships with the businesses he has not paid but admits he can only discuss the future.

He cannot settle the old firm’s debts as they are legally in the hands of administrators.

Mr Kerr said his priority was to ensure the eight jobs he saved in the takeover remain secure.

He added: “We do owe people money and that is not a nice situation. But we’re trying to get a positive out of a negative situation

“We are reassuring customers that we are still trading. When a company closes your customer base can quickly shift to another company – that’s what we’re trying to prevent.”

A spokesman for PKF (UK) said: “It will be two weeks before we release the full list of creditors but there are many creditors left likely to go without payment.”

It is understood HM customs and the banks are first in line for any assets left by the crash.

The spokesman added: “Mr Kerr will have lost money himself...he had a director’s loan account.”

The use of what is known as a “pre-pack sale agreement” instead of folding a company and a fire sale of assets is a legally-allowable move.