The charity that ran Edinburgh Filmhouse made an “unforgivable” decision not to launch a public appeal to save it from collapse, The Ferret can reveal.
The Centre for the Moving Image (CMI), which also managed the Edinburgh International Film Festival and the Belmont cinema in Aberdeen, went into administration on 6 October 2022, and closed down all its operations.
But more than two weeks before that, CMI’s audit and risk committee rejected the idea of appealing to the public for funds at a meeting because it would be “unlikely to succeed”.
The decision was condemned by an Edinburgh councillor, a trade union and a former CMI manager. The failure to consult staff was “unacceptable” and “upsetting” – and every avenue should have been explored to save the business, they said.
Meanwhile, administrators have told The Ferret that the Edinburgh Filmhouse building at 88 Lothian Road has still not been sold. Estimated to be worth more than £2m, it was put up for sale with a closing date of 7 December 2022.
The crash of CMI and the sudden closure of its cinemas and festival last October sent shockwaves through Scotland’s cultural communities. Edinburgh lost its leading independent cinema along with a popular bar and restaurant, and 102 staff were made redundant.
Reports filed by CMI’s administrators, FRP Advisory, to Companies House show that CMI made a net loss of £333,000 in the four months to July 2022. It owed over £1m to staff and creditors after it went into administration.
Insiders said that the business had been struggling for years. They claimed it could have collapsed earlier without emergency government funding to cope with the Covid-19 pandemic in 2020 and 2021.
According to the Scottish Government’s Creative Scotland, CMI had been given over £5m in government grants since 2020. This included £1.3m of Covid funding for cinemas.
The Scotsman reported that CMI had suffered losses in previous years: £217,000 in 2018-19, and nearly £300,000 in 2019-20. Annual accounts highlighted the poor condition of the Edinburgh Filmhouse building and possible reductions in public funding as “major risks”.
Filmhouse faced ‘overwhelming challenges’
In response to a freedom of information request by The Ferret, Creative Scotland released 63 heavily redacted files about CMI. They disclose growing concerns about its financial viability in August and September 2022.
On 15 August, CMI’s audit and risk committee’s main topic of discussion was whether the business was a “going concern” following a report from auditors. A decision was taken to delay signing off the accounts.
The minute of the meeting also highlighted the “complex communications process attached to any decisions taken” about change. It noted “the importance of maintaining confidentiality at all times – for staff and stakeholders”.
According to a CMI paper for the committee’s next meeting on 19 September, the situation had worsened. The charity was “facing overwhelming financial challenges that are both structural and timing,” it warned.
The minute of the meeting recorded a discussion on winding up the business. Trustees were warned that their “primary responsibility” was to protect the interests of creditors.
It was also pointed out that charity law required trustees to act in the interests of the charity and “to demonstrate that they have considered and explored all options”.
The minute added: “There was a discussion about whether to go public in seeking help. [Name redacted] stated that the scale of the projected deficit is so great that a public appeal would be unlikely to succeed.
“Ken Hay [CMI chief executive] noted that conversations with public funders will ascertain whether any additional financial support will be possible from those sources. He noted the political fallout that would happen if there isn’t support.”
Filmhouse appeal ‘may have succeeded’
The revelation that CMI failed to launch a public appeal has provoked widespread criticism. “Edinburgh Filmhouse and the film festival are a vital part of the capital’s artistic landscape – a jewel in the city’s cultural crown,” said councillor Dan Heap, Edinburgh Greens’ culture spokesperson.
“If it is true that a public appeal could have saved the Filmhouse, and yet the decision was made not to launch one, that is frankly unforgivable.”
Heap argued that “every possible avenue should have been explored” to keep it open. “Given the immense amount of love for the Filmhouse, a public appeal may have had a chance of success.”
The film trade union, Bectu, pointed out that the last few months had been an “incredibly anxious” time for its affected members. “Reports that CMI was involved in discussions about its imminent closure before its collapse, but was not transparent with staff or unions about these concerns, are all the more upsetting,” said the union’s Paul McManus.
“It’s completely unacceptable that the CMI, Creative Scotland and Screen Scotland were involved in discussions about the livelihoods of over 100 staff and no one thought the staff had a right to know what was going on.”
Bectu called for Creative Scotland and the Scottish Parliament’s culture committee to investigate the collapse of CMI and the “appalling” treatment of staff. “Our members are rightly incredibly disappointed at the apparent lack of concern for the staff’s livelihoods and rights displayed by CMI’s board,” McManus said.
After Edinburgh Filmhouse closed, a group of former employees raised £600,000 in three weeks in an unsuccessful attempt to buy the building. One of them was Rod White, who used to be CMI’s head of programming.
“I can’t help but wonder, as did many colleagues at the time, what might have been had the staff — particularly the fundraising team — been invited to a meeting to discuss options, rather than one to tell them they had one hour to collect their personal belongings,” he told The Ferret.
“It is hard to comprehend how we got from apparent inaction as concerned CMI’s financial position to the nuclear option in such a short timescale.”
The former chair of CMI’s board, Edinburgh lawyer Alastair Morrison, did not respond to requests to comment. CMI’s former chief executive, Ken Hay, declined to comment.
At the time of the collapse, the CMI board issued a statement blaming a “perfect storm” of rising costs and reduced trade “due to the ongoing impacts of the pandemic and the cost of living crisis”. It described the challenges it faced as “unprecedented” and said it had to immediately call in administrators.
Filmhouse building not yet sold
After it took control, FRP put the Edinburgh Filmhouse building up for sale on 2 November 2022. Although the selling agent, Savills, has marked the property as sold, the sale has not yet been concluded.
The Edinburgh Evening News reported that FRP had missed the deadline for requesting the transfer of the alcohol licence for the premises. When it belatedly asked the City of Edinburgh Council to approve a transfer of the licence on 30 January, it was turned down.
“An application for a new licence will be a matter for a future buyer,” a spokesperson for the FRP administrators told The Ferret.
“The Filmhouse building has not yet sold but the sales process, which is a commercially confidential matter, remains ongoing.”
The spokesperson added: “The joint administrators are unable to comment on any matters arising prior to the business entering administration. They will provide reports on the progress of the administration in line with normal reporting requirements.”
Creative Scotland stressed that it was not responsible for running the organisations it funded. “The documentation provided through the freedom of information request shows the CMI board considered the possibility of launching a public appeal and rejected this option,” said a spokesperson.
All the documents released by Creative Scotland
Cover image thanks to Rayonick/flickr. This story was edited at 08.20 on 28 February 2022 to make it clear that £1m was owed to staff and creditors after the Centre for the Moving Image went into administration.