A cultural events charity is set to dissolve and most of its creditors, owed more than £4.2m, will not be repaid, administrators have said.

The Coventry City of Culture Trust was set up in 2015 to oversee Coventry’s bid to be UK City of Culture in 2021 and subsequent activities. 

But the charity closed after identifying an accounting error in August 2022 which negatively affected its finances.

CCCT had debts of at least £4.1m when it closed, according to documents published by Companies House.

Mike Kienlen and Daryl Warwick, partners at Armstrong Watson, were appointed as administrators in 2023 and have recouped about £550,000, documents say.

But the administration process ended on 27 February and a report authored by Kienlen says most of the creditors will not be repaid.

It is the responsibility of the joint administrators to review the charity’s books and records together with any information provided by creditors to establish if further investigations are necessary, the report says.

“The purpose of these investigations is to establish whether there is a possibility of making further recoveries for the benefit of creditors,” it says.

“Following the completion of further investigations and discussion with the [creditors] committee into whether there were any potential causes of action which could be pursued for the benefit of creditors, it was determined that the risks and costs of undertaking any such actions outweigh any potential benefit to the company and its creditors.”

Financial documents show the charity has 39 creditors and the Scottish arts organisation Assembly Festival is owed the most – £1.5m.

Coventry City Council is owed £587,639 and The Police and Crime Commissioner for the West Midlands is owed £505,124.

A spokesperson for Coventry City Council said it was aware that the Charity Commission had opened an ongoing compliance case into the charity.

“The council has co-operated fully with the administrator’s investigations, and we are aware of the publication of their final report,” the spokesperson said. 

“The administration of the trust and the now confirmed loss of our loan, alongside the losses of a range of other creditors, is bitterly disappointing and is not the outcome anyone wanted to see.

“We know the loan was spent on maintaining cultural activity in the city and ensured payments to both suppliers and to major and smaller cultural bodies that had provided content and events.”

The council spokesperson said there were also many positives that its year as UK city of culture brought to Coventry.

“An independent evaluation report published in November 2023 found that Coventry received a £156.5m increase in tourism during its year in the spotlight compared to pre-Covid-19 figures,” the council spokesperson said.

“It also found that £183m of additional investment flowed into the city – all secured at least in part due to the award of the UK City of Culture 2021 title.”

The Charity Commission, Assembly Festival and the Police and Crime Commissioner for the West Midlands have been contacted for comment.