The Administration Thread

[Seth's left foot]

We must surely receive an update later in the day on Monday with time running out and that open letter being put out into the public domain. 

[Wignall12]

34 minutes ago, Coconut's Beard said:

It'll be the biggest debt of any club placed into administration though, won't it? 

The most complex one to sort out with claims by other clubs and the need for someone to buy the stadium to boot. 

We already have the least points in Premiership history so we beed a bigger trophy cabinet !!

[B4ev6is]

I just want tweet take over Is done new owners is.

[May Contain Nuts]

19 minutes ago, Gaspode said:

Of course he will - and I honestly expect any buyer to do similar. It’s a strange concept that the new owner should be liable for the debts incurred by the old owner.
Morris overspent yet gets to watch the new owner pick up a big chunk of the tab. Not entirely sure how he can sleep at night having screwed over so many people/organisations and potentially destroyed the club he claimed to love…..

It's well established by now though that someone taking over a football club is expected to want to avoid a points penalty by paying the 25% if they are able. Otherwise why even bother with  the rule / punishment?

Nobody expects a new owner to pay "The debts" no, "a fraction of the debts" though? Possibly. 

Can anyone inform me what happens in most instances of administration outside of football, percentage to creditors wise. 

Either way this argument is only considering one aspect of Ashley's approach, which I think most of his dissenters would understand and sympathise with if it wasn't paired with his other known practices as an owner.

Edited June 18, 2022 by Coconut's Beard

[Tombo]

1 hour ago, twelveincher said:

I think the only news today is that Appleby and Morgan may team up. 

Hopefully not in the Tommy Sheridan/Billy Davies sort of way?

[Oldben]

1 hour ago, G STAR RAM said:

What does this even mean?

https://www.google.com/amp/s/lastwordonsports.com/football/2022/01/29/derby-countys-debts-highest-championship-history/amp/

[Gaspode]

3 minutes ago, Coconut's Beard said:

It's well established by now though that someone taking over a football club is expected to want to avoid a points penalty by paying the 25% if they are able. Otherwise why even bother with  the rule / punishment? 

Can anyone inform me what happens in most instances of administration outside of football, percentage to creditors wise. 

Either way this argument is only considering one aspect of Ashley's approach, which I think most of his dissenters would understand and sympathise with if it wasn't paired with his other known practices as an owner.

So your main issue is with Ashley potentially screwing the creditors, but you don’t mind if other buyers do the same? Appleby or Morgan (or whoever) won’t be dishing out more money than they absolutely need to - and don’t forget that CK was only basing his bid on the minimum needed to avoid a points deduction, not because he felt particularly benevolent towards the creditors.

Seems you just don’t want Ashley - but it’s probably better to just state that rather than make out his approach to buying us will be any different to anyone else - as far as his practices as a club owner, we’re a completely different proposition to Newcastle - no-one (possibly not even Ashley himself) knows how he will look to run the Rams…..

[RoyMac5]

Mods pls remove if not allowed - not sure on this one.

"I think it is important that I first clarify the EFL’s position regarding the issue of deadlines which you raise in your letter. 

The EFL will permit a club to play in its competition while in administration for a maximum of 18 months. However, a club will not be permitted to start two consecutive seasons in administration. Given Derby County entered administration in September 2021, after the beginning of the 2021/22 season, it is the 18-month deadline that is more relevant here and will require the club to exit administration by March 2023 at the very latest. 

That said, an administrator can only continue to trade a business if they have the necessary funding to do so. Therefore, there are fundamentally two options. 

1. The administrator can restructure a business to ensure it can operate on a break-even basis until a new buyer can be identified. This will often involve stripping cost out of the business to ensure that its outgoings do not exceed its income.

2. Alternatively, the administrator can seek to utilise an external source of funding to cover the trading shortfall. Often this will be the preferred bidder as they go through the purchase process. While this avoids the challenges associated with cutting costs from the business (and the potential that it will devalue it to some degree) it is an approach that is inherently riskier, particularly if a funder is not forthcoming or if the administration process becomes protracted. In this case the administrators have funded the ongoing trading losses with further advances from an external funder which has security on the stadium. This of course has created a liability that the administrators need a prospective purchaser to repay as part of the sale consideration.  This debt has obviously grown with every passing month of administration trading.

As it stands the administrators of DCFC will need to provide the Board of the EFL with evidence that the club will meet its commitment to the competition for the 22/23 season (including an exit before March 2023) to avoid the club beginning the season but not completing it. 

Our desire to understand this situation better and take proactive action to move it forward led to last week’s statement where we announced the amendment of our Notice of Withdrawal conditions. 

Since then, the EFL and Quantuma have held daily meetings. However, the administrators have informed us that the confidentiality arrangements agreed with bidders, plus obligations owed by the administrators to individuals under the UK’s General Data Protection Regulations, means they are unable to confirm the identity of any bidder without the express consent from the relevant bidder.  In order to explain our position, we have asked for calls with the solicitors acting for those bidders who have refused consent. These calls have not yet taken place.

As you can imagine this is extremely frustrating for us. Firstly, with considerable experience in this area we believe we can help review any proposed exit plans to identify any issues as early as possible so we can then work with them to try and find any potential solutions.

Secondly, we will have significant work to do on verification of compliance with the Owners’ and Directors’ Test as well as an assessment of the ultimate source and sufficiency of funding. This clearly cannot start until we have the necessary information. 

In the circumstances therefore, if you require further information this will have to be provided by the administrators. 

To return to your original query re deadlines I understand some may say we should be stronger and impose specific deadlines but given our powers derive from the ability to withdraw central funding, impose sporting sanctions and/or ultimately withdraw membership it is difficult to see how this is beneficial to the Club at this time. As we have maintained throughout this process our priority has been doing what is within our power to assist those seeking to take the club out of administration. We continue to remain in the hands of the administrators to deliver a successful sale of the club.

We will continue to push for receipt of the necessary information and are happy to have a further update call with you early next week.

Kind regards

Trevor Birch
Chief Executive Officer"

Edited June 18, 2022 by RoyMac5
Contents of reply

[ThePrisoner]

19 minutes ago, Oldben said:

https://www.google.com/amp/s/lastwordonsports.com/football/2022/01/29/derby-countys-debts-highest-championship-history/amp/

But you have second on several occasions “the biggest football debt in the history of football”. This says otherwise, it says the Championship. Even on that alone, I don’t think that’s true either.

[B4ev6is]

9 minutes ago, RoyMac5 said:

Mods pls remove if not allowed - not sure on this one.

"

I think it is important that I first clarify the EFL’s position regarding the issue of deadlines which you raise in your letter. 

The EFL will permit a club to play in its competition while in administration for a maximum of 18 months. However, a club will not be permitted to start two consecutive seasons in administration. Given Derby County entered administration in September 2021, after the beginning of the 2021/22 season, it is the 18-month deadline that is more relevant here and will require the club to exit administration by March 2023 at the very latest. 

That said, an administrator can only continue to trade a business if they have the necessary funding to do so. Therefore, there are fundamentally two options. 

1. The administrator can restructure a business to ensure it can operate on a break-even basis until a new buyer can be identified. This will often involve stripping cost out of the business to ensure that its outgoings do not exceed its income.

2. Alternatively, the administrator can seek to utilise an external source of funding to cover the trading shortfall. Often this will be the preferred bidder as they go through the purchase process. While this avoids the challenges associated with cutting costs from the business (and the potential that it will devalue it to some degree) it is an approach that is inherently riskier, particularly if a funder is not forthcoming or if the administration process becomes protracted. In this case the administrators have funded the ongoing trading losses with further advances from an external funder which has security on the stadium. This of course has created a liability that the administrators need a prospective purchaser to repay as part of the sale consideration.  This debt has obviously grown with every passing month of administration trading.

As it stands the administrators of DCFC will need to provide the Board of the EFL with evidence that the club will meet its commitment to the competition for the 22/23 season (including an exit before March 2023) to avoid the club beginning the season but not completing it. 

Our desire to understand this situation better and take proactive action to move it forward led to last week’s statement where we announced the amendment of our Notice of Withdrawal conditions. 

Since then, the EFL and Quantuma have held daily meetings. However, the administrators have informed us that the confidentiality arrangements agreed with bidders, plus obligations owed by the administrators to individuals under the UK’s General Data Protection Regulations, means they are unable to confirm the identity of any bidder without the express consent from the relevant bidder.  In order to explain our position, we have asked for calls with the solicitors acting for those bidders who have refused consent. These calls have not yet taken place.

As you can imagine this is extremely frustrating for us. Firstly, with considerable experience in this area we believe we can help review any proposed exit plans to identify any issues as early as possible so we can then work with them to try and find any potential solutions.

Secondly, we will have significant work to do on verification of compliance with the Owners’ and Directors’ Test as well as an assessment of the ultimate source and sufficiency of funding. This clearly cannot start until we have the necessary information. 

In the circumstances therefore, if you require further information this will have to be provided by the administrators. 

To return to your original query re deadlines I understand some may say we should be stronger and impose specific deadlines but given our powers derive from the ability to withdraw central funding, impose sporting sanctions and/or ultimately withdraw membership it is difficult to see how this is beneficial to the Club at this time. As we have maintained throughout this process our priority has been doing what is within our power to assist those seeking to take the club out of administration. We continue to remain in the hands of the administrators to deliver a successful sale of the club.

We will continue to push for receipt of the necessary information and are happy to have a further update call with you early next week.

Kind regards"

You should be fine mate

But let david check it out.

[Van der MoodHoover]

10 minutes ago, RoyMac5 said:

 

What an utter waste of airspace that organisation is. He's basically written down his "do" list whilst making no commitment of any note and then tbrown in a  patronising comment or two about how complicated it all is. 

Jog on, dimwit.... ?

[May Contain Nuts]

25 minutes ago, Gaspode said:

So your main issue is with Ashley potentially screwing the creditors, but you don’t mind if other buyers do the same? Appleby or Morgan (or whoever) won’t be dishing out more money than they absolutely need to - and don’t forget that CK was only basing his bid on the minimum needed to avoid a points deduction, not because he felt particularly benevolent towards the creditors.

Seems you just don’t want Ashley - but it’s probably better to just state that rather than make out his approach to buying us will be any different to anyone else - as far as his practices as a club owner, we’re a completely different proposition to Newcastle - no-one (possibly not even Ashley himself) knows how he will look to run the Rams…..

 

Nope, stop putting words in my mouth.

If it's Ashley, it's Ashley, but you're wilfully exhibiting a classic example of “Those who don’t know history are destined to repeat it" by dismissing concerns by other fans over his running of the club. 

If it was announced tomorrow that Mel Morris was taking on Birmingham City, would you ignore his history here because we don't know he'll run them in the same way? Tell them it's a good thing for them becuse he had mid table Championship club Derby in the playoffs for a few years? 

Edited June 18, 2022 by Coconut's Beard

[Gringo]

31 minutes ago, Coconut's Beard said:

It's well established by now though that someone taking over a football club is expected to want to avoid a points penalty by paying the 25% if they are able. Otherwise why even bother with  the rule / punishment?

Nobody expects a new owner to pay "The debts" no, "a fraction of the debts" though? Possibly. 

Can anyone inform me what happens in most instances of administration outside of football, percentage to creditors wise. 

Either way this argument is only considering one aspect of Ashley's approach, which I think most of his dissenters would understand and sympathise with if it wasn't paired with his other known practices as an owner.

Outside of football most administrations are asset only sales, you only buy the assets not the business you therefore are not liable for debts which are not secured on the assets you are purchasing, also you do not have to pay HMRC as their debts stay behind with the insolvent business whose assets you have purchased. HMRC get any value from uncollected debtors or sale of machinery not included in the asset sale so they usually get crumbs. What is different here is that the EFL is a members club and if you want  to remain a member then you can only buy the business, which is the club and so you have to take ownership of the debts incurred by the club.

winding the club up would essentially remove all debts but would mean starting  again from the bottom of the pyramid 

[Carl Sagan]

So much fault connected with all of this:

• Obviously Mel for how he ran the club;
• Steve Gibson pursuing his personal vendetta to have us liquidated;
• The EFL, firstly for pursuing the club without cause (except to keep Gibson off their back and because of their own vendetta, likely due to their ongoing battles with Morris) when they should simply have accepted we'd found a financial alternative they didn't like and closed it for future seasons, and secondly for acquiescing to Gibson's pursuit of the club making a pre-February sale impossible;
• But then there's Quantuma. Everything about Trevor Birch's formal response tells me the administrators are incompetent and out of their depth and, unless something dramatic happens, their incompetence will see us thrown out of the league.

This is clearly very serious and it really doesn't look as if the people at Quantuma have the necessary skills to bring things to a satisfactory conclusion.

[Norman]

1 minute ago, Van der MoodHoover said:

What an utter waste of airspace that organisation is. He's basically written down his "do" list whilst making no commitment of any note and then tbrown in a  patronising comment or two about how complicated it all is. 

Jog on, dimwit.... ?

Sounds like the only thing he's done is ask for some calls with the anonymous bidder's solicitors, that haven't yet been acknowledged. 

That's it. It's shambolic. 

[RoyMac5]

Birch said: "...Given Derby County entered administration in September 2021, after the beginning of the 2021/22 season, it is the 18-month deadline that is more relevant here and will require the club to exit administration by March 2023 at the very latest."

Not long now then! FFS.

"...As it stands the administrators of DCFC will need to provide the Board of the EFL with evidence that the club will meet its commitment to the competition for the 22/23 season (including an exit before March 2023) to avoid the club beginning the season but not completing it."

So there is one deadline (for funds), implied but not stated, the fixture list release date (23rd June)?

Edited June 18, 2022 by RoyMac5

[duncanjwitham]

1 minute ago, Norman said:

Sounds like the only thing he's done is ask for some calls with the anonymous bidder's solicitors, that haven't yet been acknowledged. 

That's it. It's shambolic. 

And if the bidders genuinely do want to keep their interest private for now, the last thing they will want is for the EFL to know, because they’ve been leaking like a sieve since day one.

[B4ev6is]

5 minutes ago, Coconut's Beard said:

 

Nope, stop putting words in my mouth.

If it's Ashley, it's Ashley, but you're wilfully exhibiting a classic example of “Those who don’t know history are destined to repeat it" by dismissing concerns by other fans over his running of the club. 

If it was announced tomorrow that Mel Morris was taking on BIrningham City, would you ignore his history here because we don't know he'll run them in the same way? 

We would warn make sure keep him hell away from there club.

[Indy]

18 minutes ago, RoyMac5 said:

Mods pls remove if not allowed - not sure on this one.

"I think it is important that I first clarify the EFL’s position regarding the issue of deadlines which you raise in your letter. 

The EFL will permit a club to play in its competition while in administration for a maximum of 18 months. However, a club will not be permitted to start two consecutive seasons in administration. Given Derby County entered administration in September 2021, after the beginning of the 2021/22 season, it is the 18-month deadline that is more relevant here and will require the club to exit administration by March 2023 at the very latest. 

That said, an administrator can only continue to trade a business if they have the necessary funding to do so. Therefore, there are fundamentally two options. 

1. The administrator can restructure a business to ensure it can operate on a break-even basis until a new buyer can be identified. This will often involve stripping cost out of the business to ensure that its outgoings do not exceed its income.

2. Alternatively, the administrator can seek to utilise an external source of funding to cover the trading shortfall. Often this will be the preferred bidder as they go through the purchase process. While this avoids the challenges associated with cutting costs from the business (and the potential that it will devalue it to some degree) it is an approach that is inherently riskier, particularly if a funder is not forthcoming or if the administration process becomes protracted. In this case the administrators have funded the ongoing trading losses with further advances from an external funder which has security on the stadium. This of course has created a liability that the administrators need a prospective purchaser to repay as part of the sale consideration.  This debt has obviously grown with every passing month of administration trading.

As it stands the administrators of DCFC will need to provide the Board of the EFL with evidence that the club will meet its commitment to the competition for the 22/23 season (including an exit before March 2023) to avoid the club beginning the season but not completing it. 

Our desire to understand this situation better and take proactive action to move it forward led to last week’s statement where we announced the amendment of our Notice of Withdrawal conditions. 

Since then, the EFL and Quantuma have held daily meetings. However, the administrators have informed us that the confidentiality arrangements agreed with bidders, plus obligations owed by the administrators to individuals under the UK’s General Data Protection Regulations, means they are unable to confirm the identity of any bidder without the express consent from the relevant bidder.  In order to explain our position, we have asked for calls with the solicitors acting for those bidders who have refused consent. These calls have not yet taken place.

As you can imagine this is extremely frustrating for us. Firstly, with considerable experience in this area we believe we can help review any proposed exit plans to identify any issues as early as possible so we can then work with them to try and find any potential solutions.

Secondly, we will have significant work to do on verification of compliance with the Owners’ and Directors’ Test as well as an assessment of the ultimate source and sufficiency of funding. This clearly cannot start until we have the necessary information. 

In the circumstances therefore, if you require further information this will have to be provided by the administrators. 

To return to your original query re deadlines I understand some may say we should be stronger and impose specific deadlines but given our powers derive from the ability to withdraw central funding, impose sporting sanctions and/or ultimately withdraw membership it is difficult to see how this is beneficial to the Club at this time. As we have maintained throughout this process our priority has been doing what is within our power to assist those seeking to take the club out of administration. We continue to remain in the hands of the administrators to deliver a successful sale of the club.

We will continue to push for receipt of the necessary information and are happy to have a further update call with you early next week.

Kind regards

Trevor Birch
Chief Executive Officer"

So in the EFL’s own admission, their demand to automatically be party to correspondence between bidders and Quantuma would have broken the law (GDPR regs). But this could be permitted if each bidder themselves consented to the EFL seeing everything - which they have not done, presumably not seeing the value in it and/or being mindful of the fact that confidential EFL access is a direct line to the press.
 

Another world class intervention from our governing body. Brilliant. 

[Jimbo Ram]

59 minutes ago, Gaspode said:

Of course he will - and I honestly expect any buyer to do similar. It’s a strange concept that the new owner should be liable for the debts incurred by the old owner.
Morris overspent yet gets to watch the new owner pick up a big chunk of the tab. Not entirely sure how he can sleep at night having screwed over so many people/organisations and potentially destroyed the club he claimed to love…..

See Coconuts Beard’s response. Just think Ashley has got more form than most in terms of pecking at the carcass in this respect.