At a Glance
- Southend City Council says companies operated by Modella Capital have incurred £204,807.77 in liabilities.
- Despite £19,484.71 being recovered, £81,569.06 has already been written off, with £103,754.00 still outstanding.
- Southend Greens are calling for stronger rules to ensure private equity firms cannot leave councils and taxpayers bearing the cost when businesses fail.
Green Party campaigner Simon Gittus, who stood in West Leigh at the recent local elections, is calling for tougher action against private equity firms after Southend City Council confirmed that companies operated by Modella Capital owe more than £200,000 in business rates and other liabilities.
Earlier this year, Simon uncovered an £81,569.06 write-off in business rates owed by Hobbycraft following a Company Voluntary Arrangement (CVA). Following the recent administrations of Claire’s Accessories and CVA of TG Jones (formerly WH Smith’s high street operations) he asked the Cabinet Member for Finance and Transport, Cllr Paul Collins for an updated figure on the amount owed to the council by companies operated by Modella Capital.
In its response, the council confirmed, “the total value of liabilities associated with companies operated by Modella Capital in Southend-on-Sea since insolvency processes commenced is £204,807.77.”
Of that total, £19,484.71 has been recovered and £81,569.06 has been written off, leaving £103,754.00 still outstanding.
Simon Gittus said, “once again, local taxpayers are left picking up the bill while private equity firms walk away. The amount that has already been written off is staggering.
“If this is happening across high streets around the country, it represents millions of pounds that could have been invested in local communities instead of being lost through insolvency.
“I will be once again writing to our MP with this new information to ask him to take this issue seriously. If we are serious about tackling inequality and supporting our high streets, we need to stop private equity owned companies from building up huge business rate debts and ensure public money is recovered wherever possible.”
The figures released by Southend City Council raise wider questions about whether the current insolvency system is working in the public interest. When businesses fail, local councils and taxpayers should not be left carrying the cost while private equity firms move on to their next investment. Southend Greens are calling for stronger rules to ensure business rates and other public debts are given greater protection, and for greater accountability from firms that repeatedly leave communities out of pocket.