Sadly, after reporting in our last blog on the issues digital magazine The Pool was having with paying freelance contributors, its financial issues have come to a head. Talks to save the ailing publication with an injection of new cash apparently made no headway and it has entered administration.
As well as meaning 20-plus members of staff now face redundancy, the development leaves freelancers who are still awaiting payment on long overdue invoices in an even more precarious position.
The Pool, an online women’s lifestyle magazine co-founded by Radio 6 Music DJ Lauren Laverne and former Cosmopolitan editor Same Baker in 2015, had endured a difficult 12 months which had seen both founders depart. Despite being launched with £4m in funding from shareholders, it had acquired debts totalling £1.8m by the end of 2018, which media and marketing industry publication The Drum attributes to declining digital advertising revenues.
A GoFundMe page has been set up aiming to raise £24,000 to pay staff and out of pocket freelancers. But it is not clear that amount will cover what contributors are owed and they are likely to face an uphill battle recovering their debts now that insolvency procedures have started.
The main purpose of administration is to keep a business running as a going concern with a view to it being able to get back in the black at some point in the future. The appointed administrator has 12 months to complete the turnaround, which usually involves selling off all or part of the business and/or restructuring it. So at the very least, The Pool’s contributors now face a lengthy wait for any result on their debt claims.
If no rescue package can be put in place, the administrator then has the power to wind up the company. The aim then is to use any remaining assets to pay back creditors. In the majority of cases, the value of the assets and what they can raise when sold off is not enough to cover all the debts owed, so creditors have to settle for a reduction on their returns.
In addition, smaller creditors with unsecured debts such as freelancers waiting for payment find themselves well down the list of priorities when it comes to settling debts. Front of the queue are creditors with larger stakes in the business, such as bank loans or investments. By the time these get some return, there is often nothing left for smaller creditors.
All freelancers who find themselves in this position can do is contact the administrator and request to apply for a claim. Then it is a matter of sitting and waiting.
Image "Pool-drain" by Flickr user "SBTL1" used in accordance with CC by 2.0