SHR Board Meeting - 19 January 2021

Present

Apologies and declarations of interest

GW welcomed all present, especially the full Management Team and Regulation Manager Kirsty Porter (KP).  The Board noted apologies from SHR Board member Mike Dailly (MD).  GW explained that in case an appeal panel is required, AW and SW will not participate in item two and will re-join from item three for the strategy workshop. 

 GW reminded the Board that last year, in response to his invitation to anyone with concerns about SHR to contact him directly, he and RH met with a member of the Thistle Management Committee about Thistle Housing Association.  He explained that following the discussion, he had signposted them to SHR’s formal complaints procedures.  MC confirmed a complaint was submitted and following investigation, it was not upheld.  GW also reported that he had briefly and informally discussed Thistle Housing Association with one of the statutory appointees to the Association’s Board.                        

There were no other declarations of interest.

Thistle Housing Association

The Chair thanked the team for the very thorough and extensive papers and appendices supplied to the board ahead of this important decision.

IB introduced a recommendation from SHR Management Team to the Board to direct the transfer of all Thistle Housing Association’s (THA) assets to Sanctuary Scotland Housing Association.  He highlighted the case for the direction and the level of tenant and resident support for this.  He also highlighted the expertise that the Sanctuary Group  has in transfers, the work done by the voluntary statutory appointees to Thistle Housing Association Board, and their full support for the transfer proposals. 

KP summarised the proposals set out in the board paper and accompanying background material and appendix. She explained the tests that SHR had considered and that having made inquiries under section 42 of the Housing (Scotland) Act (2010 Act) that SHR’s Management Team had concluded under Section 67 of the 2010 Act that: 

• there had been mismanagement in THA’s affairs;
• THA's viability is in jeopardy for governance reasons and because it cannot provide housing services to an acceptable standard;
• a transfer of THA's assets would improve the management of the assets; and
• THA should be directed to transfer all of its assets to Sanctuary Scotland.

KP explained that SHR has also had regard to its statutory obligations under Section 67 of the 2010 Act to consult THA’s tenants, any secured creditors and the Office of the Scottish Charity Regulator (OSCR).   She reported in addition to support from the tenants and factored owners, both OSCR and the one secured creditor are supportive of the transfer. 

KP provided detail on the consultation with tenants and factored owners.  She explained the additional assurance that will be provided to them on commitments and performance from Sanctuary Scotland   KP confirmed that Sanctuary Scotland has agreed in-principle terms with THA’s only secured creditor.  

The Board considered SHR Management Team’s recommendation and discussed:

• the complexity of the issues at THA, noting the appropriate process that had been followed;
• how Sanctuary Scotland was identified as a transfer partner, noting the strategic options appraisal, followed by a competitive exercise involving three potential partners, which resulted in the selection of Sanctuary Scotland by THA. It also noted that the level of due diligence by Sanctuary Scotland and overall work and engagement that provides assurance it is fully committed;
• the disputed investment contract, noting that Sanctuary Scotland and THA are in ongoing discussions to resolve contractual issues;
• why THA requested that SHR direct the transfer, noting that it had experienced challenges around the ability to follow through with special general meetings under its rules;
• the strong mandate from tenants and residents supporting the transfer, established through the robust consultation supported by independent advisors;
• the relatively small number of tenants and factored owners who expressed concerns or objections, but agreed this was not sufficient to override the majority view of overwhelming support established through consultation;
• media interest in THA, noting SHR has a detailed communication plan in place and is working with THA and Sanctuary Scotland around their communications. It also noted direct communication planned with tenants and residents;
• briefing provided to the local MSP; and
• the financial impact of any transfer on Sanctuary Scotland, noting assurance based on our analysis of its financial capacity and the level of due diligence carried out.

The Board agreed to:

• direct THA to transfer all of its assets to Sanctuary Scotland and to make provision for the settlement or transfer of all of Thistle's outstanding debts and liabilities;
• direct THA to comply with the direction by 1 March 2021 or such later date as may be agreed with the SHR;
• issue a direction in the terms set out in section 14 of the Board report; and
• delegate authority to the Chief Executive to commence the process for removing THA from SHR’s Register of Social Landlords.

The Board agreed that the evidence very clearly demonstrated that the transfer would protect the interest of THA’s tenants and factored owners.  It asked MC to ensure that Sanctuary Scotland and Thistle Housing Association have clarity around the disputed contract position in terms of asset transfer prior to completing de-registration of THA.

The Board thanked, KP, HS, IB and all the other SHR staff involved in the case.  It also noted thanks to all the voluntary statutory appointees to Thistle Housing Association.

Actions:

HS/KP to:

• direct Thistle to transfer all of its assets to Sanctuary Scotland and to make provision for the settlement or transfer of all of Thistle's outstanding debts and liabilities;
• direct Thistle to comply with the direction by 1 March 2021 or such later date as may be agreed with the SHR; and
• issue a direction in the terms set out in section 14 of this report.

• MC to commence the process for removing Thistle Housing Association from the Register of Social Landlords and ensure that de-registration is not completed prior to Sanctuary Scotland and Thistle Housing Association have clarity around the disputed contract position in terms of asset transfer.

Strategy Session

The Board and Management Team participated in a strategy session covering:

• statutory intervention;
• SHR’s future work plans; and
• SHR’s risk register.  

DONM

Date of next meeting - 23 February 2021.