ICT business folds leaving schools in the lurch

Schools and colleges are facing losses of thousands of pounds after a computer finance company went into liquidation while still owing creditors £670,000.

Instar Digital Ltd, based in Stafford, ran IT schemes for schools, including student 1:1, salary sacrifice and staff purchase schemes.

The company, on its website, stated it levied public sector buying power so all students and staff could afford mobile devices “without the need for an expensive consumer purchase”.

However, bosses put the business into voluntarily liquidation last month amid slow takeup and a high level of bad debt.

It is now in the process of being wound up leaving 20 schools and colleges, who signed up for schemes, £171,452 out of pocket.

David Hughes, the appointed liquidator for the company, said in a statement: “The directors of the company took the decision to cease trading and liquidate the company citing a slower takeup of the scheme offered than anticipated, a high level of bad debts, costs of deliverability being higher than anticipated and an increasingly competitive market.”

Instar Digital collected direct debit payments for equipment on behalf of the schools. When it ceased trading, as first highlighted on Educate 1-to-1 blog, it had collected direct debit payments but not paid them on to schools.

It is understood IT equipment will remain with students and staff, as long as they keep up direct debit payments.

But a source said in most cases the money owed to schools will not be returned.

The list of 39 creditors included 20 schools or colleges. Ormiston Bushfield Academy, in Peterborough, is owed £8,448.

A spokesperson for Ormiston Academies Trust said: “This is very disappointing but we can be clear that none of our students’ education has been affected.

“We are always extremely careful when we undertake procurement and when we appointed this company we undertook due diligence including obtaining references.”

Abbey Grange Academy, in Leeds, is owed £5,336 and Knutsford Academy, in Cheshire, £5,336.

Monies owed to colleges included £26,214 to Tresham College, Northants, and £34,646 to Blackpool Sixth Form, Lancashire, where the company ran its iPad purchase scheme for students.

The Financing and Leasing Authority has produced an online leaflet entitled “tips for successful leasing in schools”.

It suggests schools should always find out who the finance company is, look into what the minimum lease period is and find out what options are available at the end of the lease.

The Department for Education published effective buying guidance for schools on its website in March last year.

And the Leasing Advisory Service, a claims management company, was set up in 2010 to represent victims of mis-sold leases.

David Carmichael, a consultant at the company, said the safest course of action for schools is to enter a framework agreement direct with equipment manufacturers.

Leasing schemes for IT equipment in schools were put under the spotlight in 2012 with investigations by BBC 5Live and Panorama. They highlighted cases where schools were being charged up to 10 times too much for IT equipment through mis-sold lease agreements.