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Major debts force UK agency to seek action

A UK-based study abroad agency, Apple Languages/ Language Courses Abroad, was beset by significant financial problems this year and dramatic action behind the scenes seems to have saved the agency – which was battling to ensure affected partner schools did not go under – as a blackhole of hundreds of thousands of pounds of debt was discovered.

24 IALC schools are impacted, with a total debt due of €420,000 between them

Owner, Mike Cummins, has spent the last few weeks trying to save his agency from collapse by seeking new owners and suggesting other rescue scenarios to partners. At the time of going to press, an acquisition was reported to be likely; although a previous deal involving major industry operator, Sprachcaffe, reportedly stalled.

In his first email to affected schools in October alerting them that the company was insolvent, Cummins explained to partners that “the company unfortunately experienced a fall early this year in its Google rankings, resulting in a substantial decline in sales.

“This adversely affected the profitability of the company. However, the gravity of this decline in profitability was not recognised immediately. This was due to a bug in our systems concerning the way in which our outstanding payments to schools are recorded.”

“The gravity of this decline in profitability was not recognised immediately”

Certain schools in France are among those worst hit, and 24 members of independent language school assocation, IALC, are impacted, with a total debt due of €420,000 between them.

Racking up such significant debt also raises questions over financial operations between agencies and schools, given anecdotal reports that some language school partners had not received payment for students for over a year.

The financial problems bring to mind the collapse of US agency, Amerispan, some years ago – it was eventually acquired by Don Quijote, one of its major debtees, but payment delays of over a year were highlighted when the company became insolvent.

Cummins at first emailed partner schools to let them know that it was calling in creditors and asking for its partner schools to write off 30% of their debts, and agree to a Company Voluntary Arrangement (CVA) to receive the other 70% of debts over a two-year period.

Negotiations then kicked off behind the scenes to try and ensure the long-term survival of the agency.

A stake in the Barcelona school could be brokered, said Cummins

After an initial agreement disintegrated, Cummins wrote to all partner schools again, suggesting solutions that included finding another buyer for his company, reaching an agreement to work the company out of debt with partners or inviting stakeholders to buy a share in his Spanish language school business, Camino Languages in Barcelona, which would offset the debt owed.

This story will continue to be updated. Do get in touch if you are an affected school.

 

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