Dear Charlie,

There is a unincorporated charity that is in financial difficulty and are running down their reserves. A business advisor has suggested that they trade their way out of difficulty, but to do this they would need substantial subsidy fron the LA.

What is the position for the trustees if they continue trading knowing that they are in clear financial difficulty?

Dear Charlie,

Thank you for the previous answer re: debt recovery. A charitable company has a mortgage taken out by one of the directors / trustee for £38k with:- 'Fixed & floating charge over the undertaking and all the land & whatever rights that exist over the land now and in the future and all property and all assets present and future including goodwill, book debts.'

Some other highlights:- The charitable company went into administration and was run under licence by a Co. Limited by shares, & all income & expenditure incurred by this CLS was transferred back to the charity and incorporated into the accounts; this agreement ceased when creditors agreed a percentage of their debts in a single payment. Accounts have been passed 'true & fair'.

Can you shed any light on the above - is the mortgage charge normal? Is the arangement with the CLS while in adminisdtration usual? Any help appreciated.