New questions have been asked about the collapse of one of Britain’s last municipal bus companies after further details emerged about the firm’s last days.

Halton Borough Transport (HBT) went into liquidation last January with debts of more than £2m just a month after its accountants had signed the company off as a “going concern”, expected to last at least another year.

Now, documents finally released under the Freedom of Information Act have prompted further questions about how the company came to be given a clean bill of health by its accountants.

The documents reveal that Halton Council, HBT’s owners, had promised in November 2019 to support the company financially until December 2020. However, in evidence given to a Traffic Commissioner’s inquiry in February 2020, the council said it had known by September or October that the company was beyond saving.

A letter from auditors Mitchell Charlesworth, seen by the LDRS, also shows that the company’s directors, including the council itself, failed to inform the auditors before the accounts were signed off that HBT had sold its depot – the company’s only real asset – to the council and consequently had its overdraft facility cut.

Halton Council has previously said that the decision by NatWest to cut HBT’s overdraft to just £100,000 was what caused it to withdraw its support for the company.

One of HBT’s creditors, who lost thousands when the company collapsed, is still angry about the liquidation, saying it “stinks, whichever way you cut it”.

The going concern letter HBT’s last set of accounts were signed off on December 20, 2019 and, although they showed the company was in financial trouble, gave no warning that it was about to collapse just a month later.

In fact, the accounts contained a statement from auditors Mitchell Charlesworth that HBT was expected to keep trading for at least another year.

Their conclusion appears to have been based entirely on a letter from the council’s finance director Ed Dawson that was sent on November 11, 2019 and has now been released under the Freedom of Information Act.

The letter promised that the council would “continue to provide support to enable Halton Borough Transport Limited…to meet its liabilities as they fall due, but only to the extent that money is not otherwise available to the company to meet such liabilities”.

Mr Dawson’s letter added: “We confirm that the council will continue to provide support for a period of not less than twelve months from the date of approval of the 2019 financial statements.”

In effect, the council had promised to support the company until December 20, 2020 even though, according to legal arguments made by the council’s lawyer at a subsequent Traffic Commissioner’s inquiry into HBT, the council had known the company was beyond saving by “September and October 2019” – before it agreed to support HBT for another year.

But by providing the letter, the council ensured that HBT was signed off as a going concern and could continue to trade, accumulating debts that now are highly unlikely to be repaid.

These debts include £255,222 in unpaid taxes, £18,678 to tyre manufacturers Goodyear Dunlop and £547,894 to lenders Haydock Finance Ltd.

Auditors not told about sale of garage, letter claims In previous statements, Halton Council has insisted that it did intend to keep supporting HBT but revised its position after NatWest cut the company’s overdraft from £400,000 to £100,000 on December 12.

The bank’s decision came as a result of HBT finalising the sale of its Moor Lane depot to Halton Council just two days earlier – a deal that a previously confidential council report released under the Freedom of Information Act reveals was agreed in July 2019.

One creditor, who spoke to the LDRS on condition of anonymity, said he thought the council should have foreseen that the sale of the garage would lead to the overdraft being cut to a level that could not sustain the company and informed the auditors that its position had changed.

He said: “Banks very rarely arbitrarily cut credit limits in such a short time scale, particularly when the 99% shareholder is a municipal council.  “A simple phone call to the bank during the audit would have dealt with this issue.”

In another letter to the creditor, seen by the LDRS, accountants Mitchell Charlesworth said they had not been made aware of the sale or the reduction in the overdraft and had had no reason to believe the bank would cut its support for HBT.

Mitchell Charlesworth’s letter also emphasised that, even with the sale of the garage, they would still have approved the company as a going concern on the basis that Halton Council had promised to keep supporting it for another year.

The letter went on to say that the council’s support for the company had been reconfirmed at a meeting on December 20, 2019 attended by both the company’s directors and the council’s chief executive David Parr.

During that meeting, HBT’s board said nothing had happened that might change the company’s status as a going concern, despite the overdraft being cut eight days earlier.

However, at the same meeting – after the accounts had been signed off – the board voted to take steps to liquidate the company, according to Halton Council’s own arguments to the Traffic Commissioner.

The chain of events revealed by these documents has prompted the creditor to ask again why HBT was signed off as a going concern.

Despite his questions, the creditor said he still did not expect to get any of his money back.

Halton Transport has been liquidated and has no assets, and any legal action against the council would be risky and come at a huge cost.

Halton Council declined to comment when approached regarding this story.

Mitchell Charlesworth was approached for comment, but did not respond prior to publication.