Quote: Slugger McBatt "Here's a thought.
If we accept the reality that the RFL are not going to give us a franchise, we will be a National League side next year. In which case, wouldn't £500K be much better put behind a National League team. It would go a lot further, might help us win something (which we have to do to get back into the top flight again), by which time hopefully Newmarket will be sorted and the future will look brighter.
So is the solution to go into administration, drop down, get a fighting fund for down there and so do more with it?
Perhaps someone with knowledge of company law can provide some info though, because my understanding of the Crusaders situation is that they went into administration, which of itself doesn't cleanse the debts, I think. All it does, I think, is ring-fence the assets as the administrator tries to come to agreements with creditors to sort out the debts. The Crusaders company then went bust (which is different to administration), and the new Crusaders company was set up in its place. In our case, would administration work, ie, the HMRC is not going to go away, and so we would have to do what the Crusaders did, and go bust and restart as a new limited company. But the principal asset related to our club, Belle Vue, is owned by someone else, with a payment pending on that, and so how would that work? The new club would not be allowed to say "give the money to us instead", I assume, as the money would be payable to the old company, not the new one.
What I'm trying to get round to is what would happen to Belle Vue? Would the buyer get it by default and we would have to come to a rental arrangement, and did the Crusaders avoid the tax and old debts not by going into administration, but by going bust?'"
While I work in corporate finance, I'm not an insolvency practitioner but will try to clarify things a bit to the best of my understanding.
You're correct in saying that in the event that WTRLFC Limited went into Administration, the assets will be fall under the control of the Administrator who will try to raise as much cash as possible from them while trying to sell the business as a going concern.
BV was an asset of WTRLFC Ltd before being sold to Cala Homes, and there is now an amount sitting on the company balance sheet as a debtor to WTRLFC Ltd that form part of the assets. The Administrator would look to realise as much of the outstanding money as possible, but as Cala would be paying this ahead of the contracted date they may be able to negotiate a lower amount (which would be a benefit to them).
I'm not sure how the £350k we were expecting from Yorkcourt would be treated as technically it doesn't become due (and therefore an asset to WTRLFC Ltd) until planning permission is granted.
The Administrator will also contact all creditors of WTRLFC Ltd asking them to provide confirmation of any monies due to them.
Once the Administrator has been able to establish how much can be raised from the assets to pay the liabilities, they will call a meeting of the creditors who will be told how much of their debt will be repaid. If this is accepted by the creditors a CVA will be drawn up to formalise the proposals. The order of priority for repayment of debts is i) secured creditors (i.e. the Bank) ii) unsecured creditors (e.g. HMRC, suppliers, wages, season ticket holders) & iii) the shareholders. The shareholders are unlikely to see any money unless the secured & unsecured crediors are repaid in full.
If the Administrator is able to find someone willing to buy the business as a going concern, this would normally be done through a Newco (e.g. WTRLFC 2011 Ltd). It's often the case that the CVA would also include payments over a period from Newco as the assets of the business that went into Administration is not enough to cover the liabilities. In WT's case, this MAY not be required if enough money can be realised from Cala Homes to clear the outstanding liabilities.
I know that you may now be wondering why the club doesn't negotiate with Cala now - the simple answer is that Cala probably don't have to pay us any more money until we have left BV and they have a contract to that effect. They already own the site & it's in their best interest to wait as late as possible before paying us any more money.
I would expect that anyoone buying the business from the Administrator would also be able to negotiate a certain amount of cash to be included in the deal as they will almost certainly need to honour the value of the season tickets that have been sold.
If funds do end up being passed back to the shareholders by the Administrators (and this would be split equally dependant on individual shareholdings) it is then up to them individually what they wish to do with that money. I suspect that many minority shareholders would be happy to see this money being passed to the new business running the club as we are fans, but given that Ted has entered an IVA he may well have to use any money that comes his way in respect of those debts.
At the moment, it seems to me that we will follow one of two paths. Either, £500k will be raised before the end of the month which will see the existing BoD stand down (albeit that some may wish to stand for re-election), Ted will transfer his (whole???) shareholding to some form of trust (which I would expect would be controlled by those who raised the £500k), we continue through the 2011 season with a chance of retaining our SL franchise for 2012-15 and we get the full benefit of future money paid by Cala Homes.
OR we can't raise £500k, the club enters administration in early February, a Newco takes over the running of the club (hopefully) who won't benefit from future money due from Cala Homes (as it will have been paid at a lower amount to help clear the liabilities upon entering Administration) and we play through the coming season knowing that we will not be in SL next year.
