Experts to probe why Stride, in Leicester, went under with £1m debts
Experts are to investigate what led a training organisation to build up debts of £1 million before it collapsed, leaving 285 young people without jobs and courses.
A report has revealed that Stride, in Leicester city centre, owed a seven-figure sum when it went under last month.
The company collapsed after Revenue and Customs officials launched a legal bid to retrieve £200,000 in unpaid taxes.
As a result, the Royal Bank of Scotland froze its account, leaving directors with no choice but to cease operations.
Stride taught budding bricklayers, car mechanics, beauticians and caterers.
Liquidator Neil Money, who will now look into what caused the financial problems, said Stride had been struggling for "some considerable time" before the collapse.
Mr Money, of insolvency practitioner CBA, in Leicester, said: "There are a number of areas of investigation I will be pursuing in respect to the collapse of the company.
"I think they grew too quickly. There was a change in Government policy and as a result funding was reduced. But they had the same overheads."
Mr Money said the organisation had signed leases for properties when the going was good which were difficult to get out of when the cash dried up.
When Stride closed three weeks ago, 85 apprentices and 33 staff at the group were made redundant. Another 200 students saw their training courses come to an abrupt end.
As well as the £200,000 owed to Revenue and Customs, £250,000 was owed to landlords, £130,000 to staff in redundancy payments and wages, £100,000 to a charitable fund and £75,000 to Royal Bank of Scotland.
Of the debt to landlords, £180,000 was to Leicester Social Economy Consortium, a sister business which owns property, including many of Stride's former buildings in and around Belgrave Gate. The remaining debts were to businesses which had supplied goods and services.
Rory Palmer, deputy city mayor, said: "There are some serious questions which have to be answered.
"My priority is the young people.
"While there are organisations which appear to be owed money, for me the people who stand to lose out the most are the staff of Stride and the young people who were on the courses there."
Former staff have set up a company to help those left in the lurch by the closure.
Natalie Gibson, of Trans4m, said she had so far contacted about 40 of the 85 apprentices to offer assistance.
Speaking last month, Stride's former chief executive, David Brazier blamed both a drop in Government funding and the difficult economic climate.
He said at the time: "Stride grew rapidly to 2008 and invested in further expansion, unfortunately just before the credit crunch hit."
Stride was set up in 2000 by city homelessness charity Sharp, which is unaffected by the closure.