Derby County Administration (with the slight possibility of Liquidation still there)

[jono]

5 hours ago, RoyMac5 said:

What would be the point in HMRC liquidating the club - who seem to have very few assets of value, as opposed to negotiating a deal? I'd be pissed off as a tax payer at them missing the chance to recoup some revenue.

That’s it isn’t it. If MSD have a debenture on the assets then HMRC stand to get little or nothing in a liquidation.

Its MSD I fear .. they are the one owed the most, they are the ones with the most security on the debt .. As I read that earlier post, players are included as well. ? The administrators were appointed by them I think ? They own us in all but name already 

We are in hock to them for 19 million .. they own (or control the proceeds from the sale of  ) the land, stadium and players

In short .. they get all of the first 20 million with the dregs to be shared amongst the others including HMRC. *

*all this assuming the debenture mentioned earlier means they are at the top of the list which I think they might be .. money lenders are not stupid 

 

As to the stadium, I get the feeling that it’s like buying your offspring a car .. but did you ? you didn’t really buy it if you took out a 5 year finance deal in your kids name and kept up the interest only payments for 18 months

  it feels like those stories you read about credit card bills being hidden under the carpet

 

[Crewton]

24 minutes ago, Tamworthram said:

@CrewtonJust to add, and things are getting a bit technical now, I think floating charges may crystallise and become fixed upon default. So, if the club defaulted on any loan secured by a mortgage debenture, all charges become fixed. Time for me to back out me thinks. I’m probably already well beyond my sphere of actual knowledge. ?

Thanks for adding to the debate, that sounds like what I would expect MSD to aim for in any such instrument. Like you, I'm relying on experiences that are growing dimmer by the day!

[derby8]

12 minutes ago, jono said:

That’s it isn’t it. If MSD have a debenture on the assets then HMRC stand to get little or nothing in a liquidation.

Its MSD I fear .. they are the one owed the most, they are the ones with the most security on the debt .. As I read that earlier post, players are included as well. ? The administrators were appointed by them I think ? They own us in all but name already 

We are in hock to them for 19 million .. they own (or control the proceeds from the sale of  ) the land, stadium and players

In short .. they get all of the first 20 million with the dregs to be shared amongst the others including HMRC. *

*all this assuming the debenture mentioned earlier means they are at the top of the list which I think they might be .. money lenders are not stupid 

 

As to the stadium, I get the feeling that it’s like buying your offspring a car .. but did you ? you didn’t really buy it if you took out a 5 year finance deal in your kids name and kept up the interest only payments for 18 months

  it feels like those stories you read about credit card bills being hidden under the carpet

 

Probably sums up why prospective buyers waited for administration. The buyer can ask the administrator to set out a true and fair view, discuss with all the creditors, come back with a one stop deal for the buyer to obtain the lot. The first price likely to be too high, the buyer will ask them to think again, and finally decide whether to do the deal or not. 

[DCFC Kicks]

1 hour ago, kevinhectoring said:

The stadium is not owned by Mel. 

I'm incredibly confused

[kevinhectoring]

51 minutes ago, Tamworthram said:

@CrewtonJust to add, and things are getting a bit technical now, I think floating charges may crystallise and become fixed upon default. So, if the club defaulted on any loan secured by a mortgage debenture, all charges become fixed. Time for me to back out me thinks. I’m probably already well beyond my sphere of actual knowledge. ?

I think the loan agreement probably said that the club could trade players in the usual way despite the charges. Now the admins are running the show,  I guess they will ask MSD before doing anything material 

[i-Ram]

2 hours ago, TuffLuff said:

The administrators will be well ahead of us with this info. They will look to reduce the HMRC first then look to make a plan with MSD afterwards. Both need to be cooperative because if the club ceased to exist then they would receive nothing.

There is more than a hint that something is in place, but owners need to know what is owed where before proceeding further

As a fan it’s best to remain calm, buy a ticket some merch and hopefully some of this beer! From our point of view every little bit helps

This is not correct TuffLuff - the bit in bold.  MSD are going to get repaid if we are liquidated or not. Not only do they have a charge over the stadium but they have as I understand it personal guarantees from Morris. They will get their money back one way or another from the sale of the stadium, or taking possession and redeveloping it, with the fall back of going after Morris too if needs be. They are also directly secured by the club too, and the administrator has a duty to settle their claim as a secured creditor first in preference to HMRC. Morris might also expect (he may waive the right) for the club to settle MSD’s debt first as he might not want them coming after him personally under the guarantee.

l think the HMRC position is interesting regarding whether they might try to evidence that Morris and Pearce were acting unlawfully by continuing to trade when the club was insolvent, so that they could make a claim against them personally for any shortfall. It does seem to me that COVID is a bit of a smokescreen, and that potential buyers dropping out of potential purchases is a very weak argument regarding going concern status.

[Chris_Martin]

1 hour ago, kevinhectoring said:

The stadium is not owned by Mel. 

[derby8]

1 minute ago, i-Ram said:

This is not correct TuffLuff - the bit in bold.  MSD are going to get repaid if we are liquidated or not. Not only do they have a charge over the stadium but they have as I understand it personal guarantees from Morris. They will get their money back one way or another from the sale of the stadium, or taking possession and redeveloping it, with the fall back of going after Morris too if needs be. They are also directly secured by the club too, and the administrator has a duty to settle their claim as a secured creditor first in preference to HMRC. Morris might also expect (he may waive the right) for the club to settle MSD’s debt first as he might not want them coming after him personally under the guarantee.

l think the HMRC position is interesting regarding whether they might try to evidence that Morris and Pearce were acting unlawfully by continuing to trade when the club was insolvent, so that they could make a claim against them personally for any shortfall. It does seem to me that COVID is a bit of a smokescreen, and that potential buyers dropping out of potential purchases is a very weak argument regarding going concern status.

Wonder if a possible scenario is payment in full if reach PL, meanwhile an agreed percentage.

If I was buying would want a full and final settlement now though.

[kevinhectoring]

7 minutes ago, DCFC Kicks said:

I'm incredibly confused

He owns (?indirectly) shares in a company that owns the stadium. Those shares are pledged to MSD. The company has given MSD a mortgage over the stadium. Mel really doesn’t own the stadium. The only way he gets to control it is by paying off MSD but I don’t think the administrators would let him do that unless he also agreed to pay a chunk of other creditors off 

[kevinhectoring]

15 minutes ago, i-Ram said:

This is not correct TuffLuff - the bit in bold.  MSD are going to get repaid if we are liquidated or not. Not only do they have a charge over the stadium but they have as I understand it personal guarantees from Morris. They will get their money back one way or another from the sale of the stadium, or taking possession and redeveloping it, with the fall back of going after Morris too if needs be. They are also directly secured by the club too, and the administrator has a duty to settle their claim as a secured creditor first in preference to HMRC. Morris might also expect (he may waive the right) for the club to settle MSD’s debt first as he might not want them coming after him personally under the guarantee.

l think the HMRC position is interesting regarding whether they might try to evidence that Morris and Pearce were acting unlawfully by continuing to trade when the club was insolvent, so that they could make a claim against them personally for any shortfall. It does seem to me that COVID is a bit of a smokescreen, and that potential buyers dropping out of potential purchases is a very weak argument regarding going concern status.

I certainly think you’re right that MSD will be repaid. And if there is no liquidation they probably make hay with a feisty default interest rate. But not sure they have PGs from MM. I think MM gave PGs to Gabay and things have got confused. 

[Gritstone Tup]

2 hours ago, DCFC Kicks said:

So if the £15m owed to MSD is against the stadium, and the stadium is owned by Mel. Doesn't that mean the £15m is owed by Mel? 

I thought the £15/£19 million owed to MSD was against the club?

Correct me if I’m wrong but I thought Mel borrowed £81million from MSD to buy the stadium, which is different company altogether?

Edited October 6, 2021 by Gritstone Tup

[Gritstone Tup]

1 hour ago, derby8 said:

New owner puts in cash to pay off agreed amount of debts and gets club, stadium and training ground freeholds.

In short term will try and retain players we have. Significant additions unlikely. Stadium probably has maintenance arrears that need sorting. Holds 33,000 could be expanded to 41,000. Training ground probably needs a bit of backlog maintenance too.

So club debt free, stadium and training ground should be tip top sometime next year. Owner then considers current budget, budget at ffp level, budget at break even. Decides way forward and explains to supporters.

May go for budget at break even to start, partly depends on division we're in, then considers raising to nearer ffp level in due course.

Derby County in good hands !

I presume this is a pipe dream,? as Mel owns the stadium and when/if he defaults on the approx £8million in interest repayments per year, it will fall into the hands of MSD to do what they fancy!

[PistoldPete]

38 minutes ago, kevinhectoring said:

He owns (?indirectly) shares in a company that owns the stadium. Those shares are pledged to MSD. The company has given MSD a mortgage over the stadium. Mel really doesn’t own the stadium. The only way he gets to control it is by paying off MSD but I don’t think the administrators would let him do that unless he also agreed to pay a chunk of other creditors off 

Mel Morris owns the stadium through his own company. There are mortgages but that doesn’t affect his ownership .

[Gritstone Tup]

5 minutes ago, PistoldPete said:

Mel Morris owns the stadium through his own company. There are mortgages but that doesn’t affect his ownership .

No you’re right but if he defaults on the mortgage which I presume he will, then MSD will take ownership.

is the loan guaranteed against Moor Farm and the stadium do you know?

[Tamworthram]

57 minutes ago, kevinhectoring said:

I think the loan agreement probably said that the club could trade players in the usual way despite the charges. Now the admins are running the show,  I guess they will ask MSD before doing anything material 

As I mentioned earlier, I suspect that it would have been a standard mortgage venture with floating charges over assets such as player (rather than requiring a special agreement), thus allowing the club to trade, but these may have crystalised into a fixed charge upon default and certainly upon administration but, what do I know. 

[derby8]

41 minutes ago, Gritstone Tup said:

I presume this is a pipe dream,? as Mel owns the stadium and when/if he defaults on the approx £8million in interest repayments per year, it will fall into the hands of MSD to do what they fancy!

No. Buyer asks administrator for one stop shop deal including all creditors, MSD, HMRC, etc, etc. Make them earn their money. If a deal struck including stadium freehold fine. If not buyer moves on to another project. Bad move to buy Derby County without stadium freehold, in my view.

[PistoldPete]

33 minutes ago, Gritstone Tup said:

No you’re right but if he defaults on the mortgage which I presume he will, then MSD will take ownership.

is the loan guaranteed against Moor Farm and the stadium do you know?

Why would he default on the mortgage? 

[hintonsboots]

19 minutes ago, derby8 said:

Bad move to buy Derby County without stadium freehold, in my view.

That would be a Simon Jordan type move. 

[derby8]

1 minute ago, hintonsboots said:

That would be a Simon Jordan type move. 

Yes. So many problems splitting team/ground. Palace, as you say, Coventry, Oxford and others.

[PistoldPete]

1 hour ago, i-Ram said:

This is not correct TuffLuff - the bit in bold.  MSD are going to get repaid if we are liquidated or not. Not only do they have a charge over the stadium but they have as I understand it personal guarantees from Morris. They will get their money back one way or another from the sale of the stadium, or taking possession and redeveloping it, with the fall back of going after Morris too if needs be. They are also directly secured by the club too, and the administrator has a duty to settle their claim as a secured creditor first in preference to HMRC. Morris might also expect (he may waive the right) for the club to settle MSD’s debt first as he might not want them coming after him personally under the guarantee.

l think the HMRC position is interesting regarding whether they might try to evidence that Morris and Pearce were acting unlawfully by continuing to trade when the club was insolvent, so that they could make a claim against them personally for any shortfall. It does seem to me that COVID is a bit of a smokescreen, and that potential buyers dropping out of potential purchases is a very weak argument regarding going concern status.

Sudden unexpected loss of £20 million of revenue is not a smokescreen , and if we sell players for less than we can afford to pay our creditors that would also be caused partly by covid and fire sale prices.No way will HMRC say that Derby were trading unlawfully  that is a very high bar to prove and we were nowhere near that situation prior to covid.