A social enterprise that has received more than £500,000 in Scottish Government and council subsidies and contracts is on the brink of administration.
Glasgow Furniture Initiative (GFI), which lost a £200,000 contract with Glasgow City Council earlier this year, will call in the administrators on Friday unless a rescue package can be assembled.
Such a deal is now thought to be unlikely, and key backers are privately pessimistic about the company's future.
It is the second high-profile scheme to hit trouble this year. Social Enterprise Clydebank was liquidated in March, leaving it unable to complete a £2 million recycling centre built with public and lottery cash.
GFI was established in 2007 to bring together the work of several furniture re-use organisations. It was backed with start-up grants from the council of about £30,000 in two successive years and went on to secure a £200,000-a-year contract to pick up bulky items from across the city and repurpose them.
It provides volunteering opportunities and training in skills such as the testing of donated electrical appliances. Its work was also helping Glasgow to save landfill tax charges on waste furniture items.
The firm also produces start-up furniture and electrical goods packs for social work clients going into new tenancies.
It was awarded £225,000 from a Scottish Government sustainability fund in 2008 to help it expand. The sum it eventually received was reduced to £120,000 as Zero Waste Scotland, which administers the cash on behalf of the Government, reassessed its business plans. Earlier this year, GFI lost its main contract after being unable to satisfy Glasgow City Council about its financial stability.
Confusion has surrounded the business for several weeks after its chief executive Robert Stewart wrote to selected MSPs and key figures in the recycling sector last month to warn them it was being put into administration. However, Mr Stewart now says that action was not taken.
"Officially, we don't have an administrator yet," he said. "We are speaking to stakeholders and looking at internally and externally restructuring, but a decision will be taken by members of the board on Friday.
He said the company had seen four people leave voluntarily. It now employs eight but more jobs might have to go. "A fundamental restructuring has to take place, and a plan has been discussed and approved by Zero Waste Scotland (ZWS)," he said.
However, a spokesman for ZWS contradicted this. He said: "Zero Waste Scotland has met management and board members of GFI a number of times in relation to its present financial difficulties.
"Having considered all the evidence available to us from these meetings, we do not believe there is a viable proposal which we could support at this time."
Glasgow City Council also confirmed it had exhausted options for working with the company. A council insider said:. "Ultimately we weren't confident they were financially sustainable."
Glasgow SNP MSP Hamza Yousuf said he had been in touch with the council and ZWS since hearing GFI was in trouble. He said: "We are deeply worried and concerned as the company works in one of the most deprived communities in Glasgow and we know how many families have benefited from their services."
"We are committed to making sure there is some kind of service still available to the people who rely on it."
l Demand for places on upholstery courses has hit an all-time high, with organisers saying waiting lists include former bankers, housewives and school leavers, according to The Association of Master Upholsterers and Soft Furnishers.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article