An arts centre could face closure if they do not pay back an £850,000 loan they received in 2002 from Tower Hamlets Council.
Rich Mix, based in Shoreditch, has decided to publicise the details of the dispute with the council dating back to 2011. Rich Mix said the council demanded repayment of £850,000 in one payment, but it did not offer a reason behind why it must be repaid all at once.
The loan was given to the arts centre in 2002 to help finish the refurbishment of the site on Bethnal Green Road. In 2011 Tower Hamlets Council (LBTH) issued legal papers demanding the repayment of the entire loan.
Rich Mix said it would be challenging to keep the doors open if they paid it all back at once, but they hope by publicising the details they will gain public support. They have created a campaign on Twitter asking people to tweet why the centre matters with the hashtag #RichMixMatters.
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However, Rich Mix believes LBTH owes the centre £1.6 million. In August 2010, The Strategic Development Committee agreed to pay the money to them and to establish a long-term investment reserve for Rich Mix. But the £1.6 million was not awarded to the centre because of a legal technicality.
In October last year, a judgment was issued in the High Court ruling the contract under which the £1.6 million due to Rich Mix was not enforceable because of uncertain drafting. Detailed targets for later payments were not included in the Council’s contract, thus voiding it.
The judge, Master Cook, said in his ruling that he had “an instinctive degree of sympathy with the Defendant’s position having entered into this contact in good faith and with the benefit of advisers, who no doubt negotiated with the Claimant’s advisors to produce what was thought to be a workable agreement.”
Jane Earl, chief executive for Rich Mix, said: “As a charity and an arts organisation committed to working with our local community, it’s very disappointing to have lost this part of the case on a legal technicality”.
“Our offer to settle the case with LBTH is based on a desire to resolve the issue finally without further expense of taxpayer’s money on LBTH’s part.”
Rich Mix suggested a deal following the court’s decision: if the council paid the £1.6 million of development money then they would pay the full balance of the loan in one payment. This would allow the arts centre to keep its doors open.
A Tower Hamlets Council spokesperson said: “The council considers that it would be inappropriate to comment on either on-going litigation or associated settlement discussions. Irrespective of the litigation between the parties the council remains open to constructive discussions with Rich Mix over possible partnership funding”.
Rich Mix, along with its surrounding community, hopes to see an agreement that allows them to continue operation. The business has over 200,000 visitors each year of which around a third are from lower economic groups.
A Rich Mix spokesperson said: “Our aim is to run Rich Mix as a thriving arts centre, bringing opportunities to all our local communities, and we look forward to continuing to do that”.