Leaving aside London Broncos, who are being prepare for life in the Championship anyway, the question is still a valid one, even if I remove the (Obsessive?)reference to Bradford.

What happens if Team X finish 13th and are relegated along with London, only for it to become obvious in say November this year that Team Y have bankrolled their 2014 squad to 12th spot with cash they should have paid the inland revenue and other creditors and as a result, enter administration, wiping the financial slate clean, get themselves another set of owners for 2015 safe in the knowledge that even if they finish bottom of SL in 2015, they will have a far greater player budget and SKY grant than the 4 championship teams they will play in the middle 8.
By February 2016, the skulduggery of November 2014 is a distant memory as the top 12 will rarely be bothered by the top 4 of the lower league due to on-going financial limitations and restraint.

If I reintroduce Bradford to my question, specifically to Ady.....how would you feel if Team Y above were Wakefield and Team X Bradford bulls and Wakey spending beyond their means sent you down?

The rules should be clear in advance and should be:

Go into Administration = 6 points deduction

'Go bust' = relegation to the bottom division.

Note:
Going into Administration is an insolvency event but it's aim is initially is for the Administrator to sort out the entity (company) owning the club so it can come out of administration and carry on.

By 'going bust' we would mean a club passing to an new entity (company) without the creditors of the old entity being paid off.

Wrencat is spot on. The SmokeyTA rant about punishing new owners is total rubbish. Any new owners know what they are buying and offer to pay an appropriate price for the purchase.

Agree that directors of an entity owning a club that goes bust should go on a 10 year "Not fit & proper" register. But that is pretty much in the operational rules now. Just needs tightening up.

Mr Churchill wrote

We are talking about what should be the clear rules going forward.

IMO they should be as I set out above. Clubs then know what the impact of how they operate might be.

If a club were in Administration, potential new owners could offer to buy the EXISTING entity owning the club, introducing sufficient funds to satisfy the creditors and the administrator, and then the entity owning the club would come out of Administration and carry on, albeit with a 6 point deduction. If it were a SL club, it would carry on with SL level of Sky money.

Potential new owners could, alternatively, offer to buy the club from the Administrator by way of having it transferred to their own new company. They would offer less for it than they would have to pay to buy the existing entity but as a consequence would be getting a club that would be in Championship 1 with the associated much lower level of Sky money.

So, the incentive you ask about (ie incentive to pay more to creditors) is that they would get a club still entitled to a lot more Sky money.

Ady? Smokey? Any other apologist?

Re your above scenario Gutterfax. With my proposed rules, your club Y would start 2015 in Championship 1. So your club X would get a reprieve and still be in SL in 2015.

- because new owners buying an existing entity from an Administrator would undoubtedly do so only in conjunction with a Creditors' Voluntary Arrangement. Even if, by way of a CVA, the creditors got back say even as much as 75% of what they were owed the club would still have "got away with" avoiding paying creditors 25% of what they were owed and

- as a disincentive to clubs running their affairs in such a way that any application to the court for an Administration Order would be granted.

Hence my proposal above that rules for the future should include a clear penalty of 6 points deduction for any club that goes into Administration.

I assumed you meant the new owner would buy the existing business as it stood, with all its liabilities.

I can't imagine many folk who would buy a business out administration anyway (it is extremely rare) instead of transferring the assets to a new entity (as happens in almost every case where a going concern sale of some sort is achieved).

I can imagine even fewer who would do that AND not seek to repay all the creditors. Why would anyone want to do that? You get landed with any and all liabilities, claims and whatever that might crawl out of the woodwork in the future*, with no warranties or reprersentations to pursue with the former owners as you should have in a normal sale-and-purchase agreement, PLUS all the liabilities that crystalise on insolvency. That's why it virtually never happens.

The only times I have seen it happen is where administration is used as a resolution not for insolvency but for an irreconcilable dispute between shareholders (very rare); or where some unfriendly external creditor was seeking to put undue pressure on the business threatening the going concern, and protection was sought to prevent the bad guys from bringing a viable business down (happens sometimes).

The first quite clearly must have been a factor in the Bulls case, but the business WAS technically insolvent (as many clubs are) and would have become insolvent in actuality once OK sought to have his owner's loan repaid. But I suggest the situation you describe is extremely unlikely to be encountered, and certainly in an RL environment (it may have happened in soccer), unless maybe where the club and its liabilities were far smaller?

If it DID happen, and if the creditors were not paid in full, then for all practical purposes yes I agree that there would be little effective difference between buying the company out of administration and settling (say) 75% of the creditors , and buying the assets and settling 75% of the creditors. But my response was because I could not envisage it being a likely scenario in a Rl environment.

*EDIT: although yes, a formal CVA as part of the exit route ought to give a reasonable amount of protection, in fairness.

Why on earth are they going to do this? If your club goes in to admin you lose everything you have put in to it and the club itself. Why is someone going to go in to a club, spend their own money on it, then deliberately run up huge debts to get promoted or stay up just so that someone else can try and take the club out of Admin. That sounds like an absolutely mental scenario.

Sorry, your argument is that the new owners gain a competitive advantage because they bought the club at the price the market thought it worth? Thats less an advantage and more the way pretty much every transaction happens.

You are punishing the new owners, however you want to dress that up. The thing is I have yet to see one person list one actual benefit of us doing this, simply plenty running around demanding some sort of punishment to someone to quench their thirst for penance.

That the points deduction is a benefit for the new owners because it depresses the purchase price for a rugby league club is just ridiculously stupid, not only because for the large part people aren’t paying anything for RL clubs in admin points deduction or not, its depressing a price which is starting at £0, but even if it did work Why on Gods green earth are we trying to make struggling clubs LESS attractive to investors?

Because they want to see someone be punished . Whether they are guilty or not.

Thank heavens these people are not involved in the crininal justice system.

Another car analogy!

You buy a car, roadworthy, good condition, everything...The owner tells you he was involved in an accident and the price may be adjusted because of this, brilliant!

2 days later you're arrested for a hit & run the vehicle was involved in before you'd bought it.

Heck, you bought the car, you deserve to go to prison.

You arent buying a car. You are buying a business. One that is peoples jobs and livelihoods. One that hasnt been involved in a crime. One which provides enjoyment to hundreds or thousands. One which is part of our great game. If we didnt have people like those at Bradford, or Michael Carter and his team at Wakefield. Those clubs would be dead. They wouldnt be better run, they wouldnt be spending less on players and sustainable, they wouldnt be thriving teams at a a level they can afford or any other other catchphrases people want to use to justify their bloodlust. They would dead and gone and the game would be poorer for it.

Punishing the people who try to save these clubs is not only shooting ourselves in the foot, its kicking the Dr in the balls and spitting in his face for having the audacity to try and heal it.

Heck, he became a Doctor, he deserves kicking in the balls.

Absolute tosh - there'd still be a team in Bradford.

There's been 2,3, 4? attempts to sort out the Bradford mess and all have failed despite the use of administration/ripping off the guilible. This new lot are already careering down the slippery slope with the reported loan/advance/call it what you will revealed recently. Oh, and administration was merely a vehicle to spite a creditor (one who actually saved the Bulls from going completely belly up not long ago, no less).....and those in charge of the newco are the same lot who were running the oldco. Deserving of punishment - you bet they are