The Administration Thread

[i-Ram]

1 hour ago, Tombo said:

1. Wasn't giving it large at all. Not sure what you really mean by that

2. I genuinely didn't read your wall of text, and still haven't

3. I don't owe you anything, not least a response to what was probably a load of pompous, arrogant and smug drivel. Like I said I didn't read it but I'm familiar with your work

[RoyMac5]

19 minutes ago, RadioactiveWaste said:

It's one of those where I can see the thinking (reassure the league it's going to be a sensibly run business after exiting administration) but the application is terrible (new owners paying for the mistakes of the previous owners).

If they were sensibly applied they could be helpful on the first point, but, it's an EFL additional punishment application to ensure a club that's been through difficulty cannot be seen to bounce back.

Except the penalty then carries on to the new owners. The penalty for going into admin should be born by the 'old owners' - we've had the embargo and points deduction, so should be free to start afresh. If the rules are the same for all that is!

[duncanjwitham]

45 minutes ago, RipleyRich said:

At present it is reported that the single biggest hurdle is HMRC. It is reported Admins put an offer to them in November for settlement but this has not been agreed. Reports suggest HMRC are not budging. As a preferential creditor they are due 100%. If they settle it gives a green light for all clubs with big tax debts to go into Admin and take a 12 point hit to reduce tax bills by 75%.

If liquidation occurs, it appears HMRC are due 10%, so approx £3m.
If they took 25% settlement they would get c£7.5m, so a difference of £4.5m. Not a huge difference in the grand scheme of things and in several expert reports it is suggested HMRC are looking to make an example of a Football Club and would take £4.5m hit to do just that. And a high profile one!

The reports about HMRC "not agreeing" to the proposals aren't that they explicitly disagree with them, but more than they won't agree to *anything* until they have an actual preferred bidder to agree with.  The reports are that Quantuma had shared various scenarios with HMRC and that HMRC were comfortable with them.

And I have no idea where the 10% on liquidation thing comes from, it's not anything I've seen before.  My understanding is that the admins would sell off whatever assets we had, and then work down the preference list, paying what they could. HMRC would be behind MSD and Quantuma themselves on that list, so (depending on exactly how the stadium is handled in this case, and I genuinely have no idea about that), there is a good chance HMRC get nothing.  I've certainly never seen it suggested that they get a fixed percentage of what they're owed, and I'm not even sure how that would actually work, given it depends how much is raised from the sell-off.

(Please don't take this as abuse or anything, I'm not trying to be aggressive or argumentative, we're all just trying to figure out what's going on as best we can ?)

[Topram]

Thinking back to that statement Gibson put out and we all wondered how he knew the ground sale was a problem? Not sure how true but seen a few people say Gibson and Ashley are friends could Ashley of told Gibson etc that’s how he knew? Was pretty determined to prove on that statement he wasn’t the only sticking point!

[RipleyRich]

4 minutes ago, duncanjwitham said:

The reports about HMRC "not agreeing" to the proposals aren't that they explicitly disagree with them, but more than they won't agree to *anything* until they have an actual preferred bidder to agree with.  The reports are that Quantuma had shared various scenarios with HMRC and that HMRC were comfortable with them.

And I have no idea where the 10% on liquidation thing comes from, it's not anything I've seen before.  My understanding is that the admins would sell off whatever assets we had, and then work down the preference list, paying what they could. HMRC would be behind MSD and Quantuma themselves on that list, so (depending on exactly how the stadium is handled in this case, and I genuinely have no idea about that), there is a good chance HMRC get nothing.  I've certainly never seen it suggested that they get a fixed percentage of what they're owed, and I'm not even sure how that would actually work, given it depends how much is raised from the sell-off.

(Please don't take this as abuse or anything, I'm not trying to be aggressive or argumentative, we're all just trying to figure out what's going on as best we can ?)

None taken ?

As I said, I cannot vouch for the validity of the information. I believe it was from an article written in the Mail or Telegraph (or similar).

Just thought it was interesting in that removing the MSD loan (Stadium fee) and adjusting the Football debts down to where its believed to be at c£5m. Then the residual c£35m to be paid (plus Stadium fee) appears to be about right. But, that would suggest HMRC are getting considerably more than 25%.

[kevinhectoring]

12 hours ago, S8TY said:

I will start by re-iterating that none of us no anything and is all pure speculation so here's my spin on things

I believe that there are 2 bidders one being a consortium including Morris himself the other Appleby

None of them are offering enough and Morris knows this being far too involved in the process because he owns the ground so any negotiations have to go through him as well as he holds valuable cards to any potential bidder.

MA meanwhile is sitting waiting with a bid which he wants to include the stadium but Morris wants his 22m 

Morris knows his own consortium bid is too low to clear the bar so is basically holding fire waiting for MA to increase his bid where he will then sell he can walk away with club sold and his 20-22m back

I think this only gets sorted when Appleby finally pulls out and Morris bottles it at the last min dropping his price on the stadium where MA will swoop in to buy at the price he sees its worth

I do not see MA upping his offer until its the 11th hour and only if its at the price he values it at and must include the stadium if someone in the meantime...eg Appleby manages to get more funds from somewhere he may well buy it if Mel bends slightly with the price but until the 11th hour its stalemate

Make no bones about it i firmly believe Morris wants to recoup his money 

Appleby is not quite strong enough to buy it 

Ashley is playing waiting game as he can....he has the money to outbid everyone but he has priced the value of the club and I don't think he'll budge hence why there has been no contact with Q for 2 months 

Q cannot name PB because no one has offered enough and I 100 per cent think no one will .....so Morris In my humble opinion is holding the keys to everything.

Best case Scenario - Morris at last min drops value to virtually nothing and then has to explain to HMRC about the value of the ground because he once valued it at 80m and would've had tax benefits based on that and the 22m it cost to buy it.....hence putting himself into a situation with HMRC

Worst case scenario is Appleby pulls out Ashley does not increase his bid or Morris does not let the stadium go and Morris either buys the club back himself with his consortium or lets it all go to liquidation

I still firmly think we will not be liquidated though but may end up led by a Morris led consort not through choice but because being liquidated will be worse for him than owning it himself 

Of course this may well be utter nonsense but its just my own theory of what might be happening but either way we wont be liquidated 

You say it’s speculation but it ‘fits’ with the signals we’re getting from Q, from bidders and the media. So I’d guess it’s close

MM now needs to sort this, as he (eventually) sorted the Gibbo claim. Can see he’ll find it difficult for several reasons but it just needs to be done  
 

 

[Stive Pesley]

2 hours ago, duncanjwitham said:

Right, having checked companies house in detail, this is my understanding of the situation (not an accountant etc etc).  There are 3 "loans" in play:

• Rams Investment Ltd, purely related to the stadium. Taken out in November 2019, cleared in October 2021.
• MSD, linked to *both* DCFC and the stadium. Taken August 2020, still outstanding.
• MSD, purely DCFC related, secured against the training ground. Taken October 2020, still outstanding.

There is a 4th outstanding MSD loan though - taken out by Quantuma in November 2021

https://find-and-update.company-information.service.gov.uk/company/00049139/charges/TpkBicKPVsGIALm1McZp3HHM5mQ

Presumably to keep the club afloat to the end of the season. How does this fit into the sums for any potential buyer?

[Strider]

12 hours ago, S8TY said:

I will start by re-iterating that none of us no anything and is all pure speculation so here's my spin on things

I believe that there are 2 bidders one being a consortium including Morris himself the other Appleby

None of them are offering enough and Morris knows this being far too involved in the process because he owns the ground so any negotiations have to go through him as well as he holds valuable cards to any potential bidder.

MA meanwhile is sitting waiting with a bid which he wants to include the stadium but Morris wants his 22m 

Morris knows his own consortium bid is too low to clear the bar so is basically holding fire waiting for MA to increase his bid where he will then sell he can walk away with club sold and his 20-22m back

I think this only gets sorted when Appleby finally pulls out and Morris bottles it at the last min dropping his price on the stadium where MA will swoop in to buy at the price he sees its worth

I do not see MA upping his offer until its the 11th hour and only if its at the price he values it at and must include the stadium if someone in the meantime...eg Appleby manages to get more funds from somewhere he may well buy it if Mel bends slightly with the price but until the 11th hour its stalemate

Make no bones about it i firmly believe Morris wants to recoup his money 

Appleby is not quite strong enough to buy it 

Ashley is playing waiting game as he can....he has the money to outbid everyone but he has priced the value of the club and I don't think he'll budge hence why there has been no contact with Q for 2 months 

Q cannot name PB because no one has offered enough and I 100 per cent think no one will .....so Morris In my humble opinion is holding the keys to everything.

Best case Scenario - Morris at last min drops value to virtually nothing and then has to explain to HMRC about the value of the ground because he once valued it at 80m and would've had tax benefits based on that and the 22m it cost to buy it.....hence putting himself into a situation with HMRC

Worst case scenario is Appleby pulls out Ashley does not increase his bid or Morris does not let the stadium go and Morris either buys the club back himself with his consortium or lets it all go to liquidation

I still firmly think we will not be liquidated though but may end up led by a Morris led consort not through choice but because being liquidated will be worse for him than owning it himself 

Of course this may well be utter nonsense but its just my own theory of what might be happening but either way we wont be liquidated 

 

Or he could just pay off MSD, and leave the ground at it's realistic value. The £80m figure was always nonsense but is a separate issue, IMO.

I agree with most of what you say, I strongly believe MM will not let the club go into liquidation (look how he was willing to fix the Middlesbrough issue when only he could). As an absolute last resort he will buy the club back himself, but it's a game of brinkmanship as he's trying to get the highest offer possible from the bidders.

Also feel it's inevitable it will drag out until the final hours when the funding runs out.

If it's true Q didn't speak to MA, fits with what Kirchner said last year (and by the way, his offer seemed way above all the others). And didn't Binnie bid £28m without the stadium?

Edited April 1, 2022 by Strider

[duncanjwitham]

7 minutes ago, Stive Pesley said:

There is a 4th outstanding MSD loan though - taken out by Quantuma in November 2021

https://find-and-update.company-information.service.gov.uk/company/00049139/charges/TpkBicKPVsGIALm1McZp3HHM5mQ

Presumably to keep the club afloat to the end of the season. How does this fit into the sums for any potential buyer?

I glossed over that a bit because the post was getting pretty long.  It's basically just another extension of the MSD loan, that was taken to provide funding for the rest of the season. It seems to be secured against the training ground again, so presumably there was enough collateral left for MSD to feel comfortable with the extension without additional security.  We don't know for sure how much it is, but I suspect it explains the gap between the £20m MSD loan value in the statement of affairs, and the ~£22m Morris is supposedly after for the stadium.

I don't think it materially changes that much for potential buyers. You've still got a decent chunk of MSD loan to deal with in one way or another, it's just fractionally bigger now.  If they're willing to pay for the stadium, then they'll just have to pay a bit more.  If they think they can force Morris to pay it, then they can probably force him to pay slightly more. 

[DCFC27]

I think I’ve said this before and the EFL constantly checking for funds doesn’t help. The admin should be saying they haven’t got any money, we’re on the edge of liquidation. Come now if you want to buy. If not we’ll be gone. 
At the moment, people are going to wait and wait until the last minute, when the club is down to its last penny. 

[JfR]

Might be a little something of interest over at Preston
Looks like the Kirchner bid has fallen through there, as well

 

[duncanjwitham]

3 minutes ago, JfR said:

Might be a little something of interest over at Preston
Looks like the Kirchner bid has fallen through there, as well

 

I don't agree with Kieran Maguire on a lot of stuff, but here's bang on here: 

 

[kevinhectoring]

2 hours ago, RipleyRich said:

The way I see that is this:

1. The max MM can lose is £20m. That applies if he either gives the Stadium away to effect a sale of the club, or, in the event of liquidation he settles the loan but retains ownership of the "assett"

2. HMRC forced a rule change to stop Football Clubs using administration to avoid/reduce tax bills. I genuinely believe they will stick it out for either a bigger settlement than 25% or be prepared to forego a max £7.5m to drive home a message to the Football World.

3. I cannot imagine that MSD secured a £20m loan against an asset that would not have sufficient residual value in the worst case scenario. They surely are not that niaive? I am convinced they would have done due diligence and have a back up plan for redevelopment or similar.

4. If the preferential creditors cannot be satisfied that becomes an inevitable fact.

5. EFL will quite rightly lay the blame at mismanagement by the clubs owner and Directors.

6. Within a short space of time there will only be Derby County fans and Forest Fans that will truly miss DCFC in the long term. Unfortunately DCFC do not have the financial necessity to the EFL that Rangers did to the SFA.

I’d think MSD does have reasonable security cover. Otherwise they wouldn’t have made a further working capital loan to the admins. It’s been suggested by various people they have a PG from MM, also that they have a £20m cash deposit from him  -  and that in addition to security over the club and stadium 

On HMRC: you repeatedly suggest the HMRC rule change was aimed at the football sector. It wasn’t, it applies generally. Q told us HMRC recognised the club as a community asset and were expected to play ball - why don’t you believe them?

Edited April 1, 2022 by kevinhectoring

[Caerphilly Ram]

4 minutes ago, duncanjwitham said:

I don't agree with Kieran Maguire on a lot of stuff, but here's bang on here: 

 

Unless of course he’s back in for Derby?! But he would have plastered it all over the place if he was like last time right? Apparently another chancer. ?

[RoyMac5]

45 minutes ago, Strider said:

...Also feel it's inevitable it will drag out until the final hours when the funding runs out.

If it's true Q didn't speak to MA, fits with what Kirchner said last year (and by the way, his offer seemed way above all the others). And didn't Binnie bid £28m without the stadium?

That was their 'quoted' first bid, yeah. Then they come back with £30m for everything and you think...woah!

[Elwood P Dowd]

11 minutes ago, Caerphilly Ram said:

Unless of course he’s back in for Derby?! But he would have plastered it all over the place if he was like last time right? Apparently another chancer. ?

Kirchner Will probably blame Mel for this failed takeover as well.

Kirchner is an odd character ?

[Oldben]

https://optimalcompliance.com/who-audits-the-auditors/

[atherstoneram]

2 hours ago, RipleyRich said:

The way I see that is this:

1. The max MM can lose is £20m. That applies if he either gives the Stadium away to effect a sale of the club, or, in the event of liquidation he settles the loan but retains ownership of the "assett"

2. HMRC forced a rule change to stop Football Clubs using administration to avoid/reduce tax bills. I genuinely believe they will stick it out for either a bigger settlement than 25% or be prepared to forego a max £7.5m to drive home a message to the Football World.

3. I cannot imagine that MSD secured a £20m loan against an asset that would not have sufficient residual value in the worst case scenario. They surely are not that niaive? I am convinced they would have done due diligence and have a back up plan for redevelopment or similar.

4. If the preferential creditors cannot be satisfied that becomes an inevitable fact.

5. EFL will quite rightly lay the blame at mismanagement by the clubs owner and Directors.

6. Within a short space of time there will only be Derby County fans and Forest Fans that will truly miss DCFC in the long term. Unfortunately DCFC do not have the financial necessity to the EFL that Rangers did to the SFA.

It was stated in parliament that HMRC would not be the reason for the clubs demise so people automatically think they will accept 25%.

All HMRC have to do is offer a payment plan of 25% upfront with the remainder paid off in monthly instalments over 3 years. By the looks of things there is no way any interested party would agree to that so HMRC can then turn round and say they offered to help the club out by taking the outstanding monies owed in instalments but the new owners refused the plan.

[atherstoneram]

3 hours ago, BramcoteRam84 said:

Liquidation would be a disaster for everyone involved and considering the amount of interest we’ve had would be a complete abomination. Reputations destroyed particularly Q who certainly wouldn’t get another football gig. Liquidation would be a sad indictment of all parties involved. Everyone will have lost something. 

The administrators reputation would not be destroyed, if they can't get the parties to come to some sort of agreement there is nothing they can do.They can't force people to do something they are unwilling to do. It is the state of the finances which is the problem not the administrators,they are not miracle workers.

[atherstoneram]

3 hours ago, Eatonram said:

Atherstone

2. HMRC forced a rule change to stop Football Clubs using administration to avoid/reduce tax bills. I genuinely believe they will stick it out for either a bigger settlement than 25% or be prepared to forego a max £7.5m to drive home a message to the Football World.

You make the HMRC point a lot. HMRC deal with debt via administrators quite a lot. They in the vast majority of cases are offered a choice between 2 figures, percentage of valuation of liquidated assets OR a percentage of money raised through sale as going concern. They take the higher figure.

What you are suggesting os that HMRC will take a bigger loss to "drive home a message to the Football World." In other words treat the Football business in a different way to all other businesses. You may be right but I find that unlikely.

Football is a different business to all other businesses.