Sydney Carriageworks saved but not all creditors happy with rescue package

The multi-arts institution, a casualty of coronavirus restrictions, will survive with support from philanthropists and the NSW government

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.”


Stephanie Convery

The GuardianTramp

Related Content

Article image
'Big fat canary in the coalmine': Sydney Theatre Company strives to secure future
‘We don’t know when we’re reopening and we don’t know how audiences will respond,’ executive director says

Stephanie Convery

30, Jun, 2020 @8:44 AM

Article image
'Ridiculous' secrecy: confusion surrounds fate of $7m arts bailout money in $50m NSW government scheme
Exclusive: Almost half the Rescue and Restart funds spent so far went to one company, while concerns remain about lack of transparency in other grant allocations

Kelly Burke

14, Jan, 2021 @6:28 AM

Article image
Sydney festival, Opera Australia and Rent to continue with opening nights as NSW Covid cases rise
Major productions will open within days at the Sydney Opera House, where masks aren’t mandatory

Elissa Blake

30, Dec, 2020 @4:58 AM

Article image
Philanthropists offer support to beleaguered Sydney arts institution Carriageworks
Billionaire Kerr Neilson and daughter Paris come out as members of a cohort of potential funders

Stephanie Convery

22, May, 2020 @6:13 AM

Article image
Sydney theatres on tenterhooks and music festival cancelled as NSW braces for ‘astronomical’ Covid rise
Theatres extend mask and vaccination mandate and prepare for ‘inevitable’ infections among cast as Omicron fears shut down Newcastle’s Lunar Electric festival

Elissa Blake

16, Dec, 2021 @4:30 PM

Article image
A tale of two cities: Sydney shows prepare to reopen as Melbourne theatres remain mothballed
NSW is taking a ‘very aggressive’ approach to reopening, but there is ‘no roadmap’ in Victoria, industry leaders say

Elissa Blake

21, Sep, 2021 @9:00 PM

Article image
'We have broken a lot of hearts': Frozen, Pippin cancel shows amid Sydney Covid outbreak
Magic Mike and My Brilliant Career also have runs affected, but the show goes on for Sydney Theatre Company – as the Sydney festival holds its breath

Elissa Blake

22, Dec, 2020 @3:45 AM

Article image
Revealed: the ‘buried’ Powerhouse Museum report that could have stopped $500m redevelopment
A prominent heritage architect alleges the NSW government terminated his contract and hired another company after he advised that the Ultimo site should be heritage listed

Kelly Burke

25, Apr, 2023 @3:00 PM

Article image
‘Everything had been on hold’: Powerhouse Museum announces program after rocky few years
Chief executive Lisa Havilah has faced a series of setbacks and controversies since stepping up in 2019. Now the Ultimo site can finally unveil what’s next

Kelly Burke

09, Feb, 2021 @4:59 AM

Article image
Powerhouse Parramatta: heritage activists lose legal battle but pin hopes on green ban
NSW government wins case to relocate the 140-year-old Willow Grove mansion, but unions vow a green ban will save the site

Kelly Burke

16, Jun, 2021 @2:49 AM