Carriageworks has a clear path towards recovery after creditors voted unopposed on Tuesday for a proposal to rescue the arts company with the support of philanthropists and the New South Wales government, but not everyone is happy with the deal.
The multi-arts institution in Sydney’s inner-west went into administration on 4 May after suffering an “irreparable” loss of income following the shutdown of non-essential services in NSW due to the coronavirus crisis.
Carriageworks owed more than $2m to more than 140 creditors, including many individual artists and small arts companies.
Despite those creditors voting on Tuesday to save the company, some who spoke to Guardian Australia expressed concern about the financial blows that were ultimately falling on the shoulders of those smaller players, who would receive a fraction of the amount they were owed by Carriageworks – even in the case of its rescue.
Since their appointment, administrators Phil Quinlan and Morgan Kelly from KPMG had been strongly pushing for creditors to agree to a deed of company arrangement (DOCA) rather than opt for liquidation.
The DOCA relied upon pledged contributions from philanthropists – including Geoff Ainsworth and his wife Johanna Featherstone, Kerr Neilson, Michael Gonski and the Packer Family Foundation – that were contingent upon the security of a long-term lease of Carriageworks’ Eveleigh premises and funding from the NSW government.
Since 2017, Carriageworks has been operating on a month-by-month lease at the historic Eveleigh rail yards. The company, which has a number of resident arts organisations, subleases the premises from Create NSW, which in turn leases it from Transport NSW.
The insecurity of the leasing arrangement, and Create NSW’s failure to commit to a funding timetable for Carriageworks’ multi-year support, were key factors in the company’s collapse.
In June, the second meeting of creditors was suspended until Tuesday this week to give the administrators more time to secure assurances from the government on these issues. Newly reinstated NSW minister for the arts, Don Harwin, announced on 10 July that the government had agreed to these terms.
The DOCA allows for priority employees to be paid their entitlements in full, while unsecured creditors – many of which are individual artists and arts companies – are expected to receive an estimated 20-30% of what they are owed.
While they would have received nothing in the case of liquidation, early estimates suggested the individuals and organisations owed money by the company would receive between 25% and 37% of the outstanding sums in the event that a DOCA was approved.
However, some members of the arts community are frustrated that the administrative timeline had blown out – that as negotiations to secure the lease agreement and funding from Create NSW dragged on, the administrators’ high fees ate into assets that would have otherwise been dispersed to creditors.
Visual artist Rafaela Pandolfini told Guardian Australia that small to medium companies were forfeiting disproportionately large sums in order for the Carriageworks to reopen.
“We are one of the greatest financiers of Carriageworks moving forward so why don’t we also have a substantial say in how it will be run when it returns?” Pandolfini said.
“I would like to see Carriageworks acknowledge this disastrous effect on the artistic community and remodel.”
She also called for a greater focus on diversity, equal pay structures across the organisation, and “sustained pay and support to the artists involved in their programs rather than the gig economy”.
“It was another financial blow that was not necessary,” another creditor told Guardian Australia on condition of anonymity. “We are excited that Carriageworks is coming back, but I don’t think people understand what that means for us as creditors. So many of us have lost work already.”
The NSW government stepping forward on the DOCA proposal and agreeing to the lease and funding in a timely manner “would have been a really simple way to get money into the pockets of the arts workers. We’re all quite disappointed about that.”
“When you see these announcements about Carriageworks you don’t think about the people who actually are bearing the cost of it,” the creditor said. “Arts workers are in a crappy position anyway. This blow was avoidable.”
“We are both conscious and embarrassed that creditors have been disadvantaged,” chair of the Carriageworks board, Cass O’Connor, told Guardian Australia. “The arts communities feel quite vulnerable, and people are concerned that other organisations are teetering. Everyone’s worried about that and it’s completely justified.”
She said the philanthropists backing the company’s renewal, particularly Geoff Ainsworth and Jo Featherstone, were “very keen that we were more generous than usual to the creditors involved, because many of those creditors were from the arts community”.
“We wanted to pay as much as we humanly could, while also raising enough money to go into the future activities of the company and precinct. It is a balancing act,” O’Connor said.
“We were frustrated at some of the delays. We – along with the creditors, and frankly, KPMG – were very frustrated that the second meeting had to be extended. KPMG were very upfront about what that would mean. From my viewpoint, this certainly wasn’t a fee gouge by KPMG.”
The administrators will hand back the company to its directors in the next seven days, with public operations expected to resume in the coming months, beginning with the reopening of the farmers’ market in August.
O’Connor said a key plank of the new sustainable business plan, approved by the parties involved in the DOCA, was a funding buffer to guard against further downturns, such as if Sydney was to experience another lockdown.
In a statement on Tuesday, Carriageworks chief executive Blair French thanked those who had lent their support to the institution since it went into administration. “The risk of closure gave rise to a most extraordinary expression of community support that gave great heart to everyone involved with Carriageworks,” he said.
“We recognise the impact of this process upon our staff, artists, suppliers, farmers’ market producers and audiences and look forward to re-engaging all our stakeholders as we re-emerge with renewed confidence and strength into what remains an operational environment constrained by Covid-19.”
