The Vincent Community Board has been asked to consider the implications to the community should the Blossom Festival committee go into receivership.
The board has been asked to bail out the annual festival, which is technically insolvent after three successive years of losses, totalling more than $131,000. The 2009 festival still owes $80,231 to creditors.
Board chairwoman Clair Higginson said the board would discuss members' potential conflicts of interest on Monday, before the item was discussed at the meeting.
Acting festival committee chairman Tim Cadogan is a board member and so is Martin McPherson, who has been selected as the event manager for this year's festival, should it be held.
Ms Higginson declined to speculate on what the board's decision might be.
"We'll be balancing out the importance of the iconic event against the size of the existing deficit and what role the board believes it has in resolving that," she said.
Mr Cadogan told the Otago Daily Times he had "several" conflicts of interest so planned to abstain from voting on the matter.
The meeting was "crunch" time for the festival. Creditors had been very patient, but it was time to decide on the future of the event, he said.
"If any other report is called for, or any other delays, then we're only six months out from the 2010 festival, so we can't really wait any longer."
Central Otago District Council chief executive Phil Melhopt has prepared a report listing the board's options. In that report, he said any of the festival creditors could apply to have the festival committee wound up.
The board had to consider the implications of receivership, he said.
A receiver would take control of the accounts, liquidate any assets, pay preferential creditors and make any final distribution to unsecured creditors.
"Given the current bank balance of $11,923 [as at March 17, 2010], creditors would be unlikely to receive more than 14c or 15c in every dollar."
If the committee went into receivership, a new entity would be required to govern the festival, sponsors might pull out or reduce support, suppliers might not provide goods and services required for the event, there could be a loss of public confidence in the committee and the event, and there was also the potential loss of the event to consider, Mr Melhopt said.
The board had promotional funds available for a grant to the committee, and/or the ability to offer financial support by way of a repayable loan. The committee had asked the board to cover the shortfall in funds from the 2009 festival so creditors could be paid.
There was $11,000 unspent from the board's promotional budget, and a portion of the coming year's promotional budget could be allocated in advance, he said.
More than $9100 had been raised for the festival through a public appeal launched earlier this month.
Mr Melhopt outlined the options available to the board but did not indicate which option he favoured.
BLOSSOM FESTIVAL
Creditors 2009 festival (as at March 2010)
> HireQuip - $47,587
> Allied Security - $8208
> ATL (Fulton Hogan) transport - $6461
> Taieri Print - $5181
> RadioWorks - $4125
> Fulton Hogan - $3086
> Innerwink (event manager) - $2868
> Mosgiel Brass Band - $1500
> McDermott Coaches - $1093
> Alice Stewart - $75
> Central Otago Copiers - $43
Total owed - $80,231
• Options for the board
- Do nothing
- Provide a grant for all or part of the shortfall.
- Provide a loan for all or part of the shortfall.
- Combination of grant and loan for all or part of shortfall.
