Sea Change had approved an assignment of the lease to Azur Events in 2016 despite its sole director David Thorpe-Tracey presiding over two previous periods of tenure which each ended in company insolvency – of Lightening Leisure Limited in 2011, then Azur Marina Limited in 2016. 

By 2019 Azur Events, too, appeared in financial trouble, unable to pay the rent for the premises, which by that time had risen to £90,000 per year, or to comply with repairing covenants. There was roof damage and increasing dilapidation. But when Sea Change eventually brought a winding-up petition in the High Court, the leasehold company counterclaimed, alleging that there had been mis-accounting and that a potential insurance claim had been pursued inadequately by Sea Change and/or by the freeholder, Hastings Borough Council.

Eleven months after the first court hearing in this dispute, Sea Change have accepted a surrender of the lease and taken back possession of the building. Their spokesperson has said that they will commission surveys to assess its condition and to identify any works necessary. They will then put the venue on the market to seek a suitable operator “so it can be re-opened for the local community as soon as possible”.

 Yoga classes and other hirers of the premises won’t be able to use the building in the short term. Sea Change are holding open the prospect of their return, however, “as soon as possible”.

In that year, Hastings and Bexhill Renaissance Limited (trading as Sea Space) obtained planning permission from Hastings Borough Council in that year to redevelop the site by building a single-storey structure above it on the upper promenade. This scheme added a restaurant and ancillary kitchen at the higher level. At the same time the lounge was refurbished to provide a conference centre and other function rooms.

Permission was granted against considerable opposition from English Heritage and local conservationists, concerned at the visual impact on the nearby listed buildings of Burton St Leonards.

Sea Space took a long lease from Hastings Borough Council, which is the freehold owner, and financed the redevelopment with public ‘regeneration’ funds reported as totalling over £1.946m – £1.713m from SEEDA (the South-East England Development Agency) plus £233,000 from the ERDF (European Regional Development Fund). 

First and second underleases

In 2008 Sea Space underlet the premises to a company Lightening Leisure Limited (LLL) under the direction of co-shareholders David Thorpe-Tracey and Allison Luzar, who introduced the Azur branding. Within a year Mr Thorpe-Tracey bought a majority shareholding in LLL, and he became sole director from December 2009. In 2012 the company was dissolved owing £345,000 to Sea Space plus approximately £280,000 to HMRC in unpaid PAYE, NIC and VAT.

A fresh company Azur Marina Limited formed by Mr Thorpe-Tracey and his new partner Dean Williamson was offered a replacement underlease by Sea Space with a term of 65 years from May 2011. Their new company accepted full repairing obligations and liability to pay an initial rent of £50,000 per annum, raised on review to £60,000. 

Once again Mr Thorpe-Tracey was appointed as sole director and in 2012/13 he largely bought out Mr Williamson’s shares. In October 2014 the superior lease was passed from Sea Space to a freshly formed ‘regeneration’ company East Sussex Energy Infrastructure and Development Limited (trading as Sea Change, later Sea Change Sussex) at a price of £500,000. 

By 2016, however, Azur Marina too was hopelessly insolvent. Its winding up in July of that year left unsecured creditors owed £312,500, including £132,000 to British Gas and £112,500 to Sea Change.

Third time round

It might be imagined that by this time the management of Sea Change would steer away from further dealings with any company owned or directed by Mr Thorpe-Tracey. But, no, a third company of which Mr Thorpe-Tracey was (or would shortly become) sole director and majority shareholder, Azur Events Limited, was approved by Sea Change to take over the lease. 

The eventual final report of the liquidation of Azur Marina referred to “an investigation into the conduct of the Company’s Director” and to a resulting “confidential” report submitted by the joint liquidators to the Insolvency Service in September 2016, which has never been revealed. But Azur Events, under Mr Thorpe-Tracey’s direction, has continued to have full charge of the business, though not, according to Sea Change’s spokesperson (see page 1), making full rent payments nor, from casual observation, maintaining its obligations to repair and decorate.

The balance sheet of the last filed company accounts of Azur Events shows net liabilities as a little under £42,000.

Sea Change has not disclosed the amount of debt on which its winding-up petition for hearing on 1 March is based nor whether there are any other creditors who may be seeking joinder.

Read about the Azur’s precarious future here.

The future of the Azur Marina Pavilion on St Leonards seafront will be at stake next Wednesday 1 March in the High Court in London. The company which owns and manages it, Azur Events Limited, faces a winding-up order on a petition brought by the freehold owner Sea Change Sussex (the trading name of East Sussex Energy Infrastructure and Development Limited) for rent arrears under its lease. 

According to a spokesperson for Sea Change, Azur Events has been given “additional time” and rent reductions both pre- and post-Covid, but “has failed to keep up with payments due under the lease, and the amount we’re owed has continued to grow throughout much of the lease term”.

The issue of the petition is described on behalf of Sea Change as “a last resort action on our part – not a decision we’ve taken lightly. We’ll see what the court decides at the hearing on 1 March and hope the matter gets resolved swiftly so the property can continue to be of benefit to the local community for years to come.”

No doubt, Sea Change’s reference to the local community stems from its role – and that of its predecessor Sea Space – in managing public sector ‘regeneration’ funds in East Sussex over the past two decades. More particularly, it must be mindful of its record of financial losses in relation to the Azur premises for almost the whole of that period. For a full history, see page 3: Azur Time Goes By.

Future prospects

Sea Change has not disclosed at this stage what debt is due. It may be that, notwithstanding the two previous insolvencies of the successive lessee companies managed by sole director David Thorpe-Tracey (see his statement below), Azur Events is able to persuade the court that it has a reasonable prospect of paying off the debt or otherwise persuading its creditors to allow it to continue trading. It seems to be continuing to take bookings (and perhaps deposits) for future events such as weddings. 

However, there are other indications at the premises that the company’s finances are geared to the shorter term and that repair and decoration provisions in the lease are being disregarded. A sign posted on the window of the premises last weekend (next to one advertising Christmas parties which has yet to be removed) states that customers’ payments are being accepted on a cash-only basis. On casual observation the windows are filthy with loose metal panels. The roof also appears in poor condition with a patchwork of repairs. It is difficult to see how the business can be revived without a large injection of fresh capital. 

So why hasn’t Sea Change taken steps to forfeit the lease and begin again? That’s not a conversation which anyone representing that company seems willing to enter into. 

Stop the Press!

On Monday afternoon, as our news pages were going to press, David Thorpe-Tracey provided a statement on behalf of Azur Events. In it he alleges that Sea Change and Hastings Borough Council have together prevaricated on an intended purchase by his company of the head lease, and that Sea Change has increased the annual rent from £60,000 to £90,000 despite the Covid-19 lockdown, while being itself responsible for major building defects at the premises including a “substandard” roof, an “inadequate Victorian drainage system”, and incorrect installation of heating and air conditioning units. The statement also challenges the amount of the debt claimed in the winding-up process.

“For the past 15 years,” Mr Thorpe-Tracey says, “Azur has been a hub for the community, supporting local businesses, community groups and charities, providing award-winning customer service to thousands of local residents and visitors from outside the area who have chosen to hold some of the most important days of their lives at Azur such as weddings, anniversary celebrations, birthdays and, sadly, end of life services”.

He asks: “What is going to happen to the 45-plus functions that are already booked to take place in 2023/24, and what will happen to safeguarding the deposits from those 45 events, as well as the safeguarding of the St. Leonards Studio and Babilicious, regular and repeat businesses that are only able to use Azur due to its location and its square footage?” 

Who’s responsible?

And what about Hastings Borough Council (HBC)? As the freehold owner of the site, it is Sea Change’s ultimate landlord at the site with  powers to oversee Sea Change’s tenure by enforcing obligations under its superior lease.

It is also registered on the Companies House file as being a “person with significant control” of Sea Change, which should mean that it holds more than 25% of the voting rights in the company – Rother District Council and East Sussex County Council likewise.  However, the Articles of Association adopted at the outset of the company in 2011 gave the three councils only a combined vote of 19.9%. The director appointed by Rother, Cllr Kevin Dixon, resigned from the board in February 2022, citing “lack of progress on key projects” and “constant disagreements with the three local authorities”, and informing his council in an open meeting that “the reputational damage to myself and to the Council of being associated with Sea Change is just too great”.  HBC’s leader, Cllr Paul Barnett, followed suit in March 2022, and has taken no steps to appoint any successor on the board.

In short, HBC seems intent on avoiding any responsibility for the conduct of Sea Change, though whether this avoidance is in the best interest of its citizens may come under fresh scrutiny in present circumstances.

There may (or may not) be fresh disclosures at, or as a result of, the hearing on 1 March.

Read about the Azur’s chequered past here.