The Administration Thread

[Eddie]

I have nothing of value to contribute - except this...

 

[RadioactiveWaste]

25 minutes ago, duncanjwitham said:

It's definitely not a football debt (those are literally just stuff owed to other football clubs, players, coaches, managers etc), but it's a secured debt (against the stadium, training ground and literally everything else the club owns).  So if we just don't pay it, MSD get to repossess as much stuff as they can, until they've got enough to cover what they're owed.  There's no prospect of paying 25p in the £1 or anything either, again they'll just repossesses stuff until they get 100%.

So all the talk about Morris just giving the stadium back needs a bit more nuance.  There's no point him giving it back if the MSD debt isn't cleared at the same time (by one party or another).

(Not an accountant etc...)

I'm sure Mel would give away the stadium if he could give away the debts against it at the same time. what he's seems to be unwilling to do is pay off the debt and then sell the stadium.

[BramcoteRam84]

47 minutes ago, Eatonram said:

No matter what the various scenarios are, it is hard to see how liquidation could possibly be a good out come for any of the main players.

1 MM will lose a fortune

2 HMRC will lose a fortune

3 MSD will be left owning a stadium/training ground with no Tennant.

4 Other creditors lose a fortune

5 EFL reputation as a governing body further destroyed

6 Football as a whole loses DCFC, a founder member, likely to hasten structural change even to the PL whether they like it or not.

 

There is not an outcome for any stakeholder that is worse than liquidation, so for this reason alone, I have hope.

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. 

[Eatonram]

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.

[curb]

1 hour ago, Eatonram said:

No matter what the various scenarios are, it is hard to see how liquidation could possibly be a good out come for any of the main players.

1 MM will lose a fortune

2 HMRC will lose a fortune

3 MSD will be left owning a stadium/training ground with no Tennant.

4 Other creditors lose a fortune

5 EFL reputation as a governing body further destroyed

6 Football as a whole loses DCFC, a founder member, likely to hasten structural change even to the PL whether they like it or not.

 

There is not an outcome for any stakeholder that is worse than liquidation, so for this reason alone, I have hope.

1 MM will say he lost more than enough chasing the dream

2 HMRC will say they’ve made an example of us to discourage other clubs thinking they can get away with it.

3 MSD will write it off as a bad loss

4 Administrators will say it was an impossible situation.

5 EFL will say they gave us enough time

6 Football as a whole will mourn for ten minutes before fixating on another headline, an England player being booed or something     equally trivial.

7 We’ll be devastated but nobody will give a poo until it happens to them.

[RipleyRich]

9 minutes 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.

They forced the rule change for a reason. That's my only logic and until I see evidence to the contrary I'm afraid that is what I fear.

[ollycutts1982]

17 minutes ago, Eddie said:

I have nothing of value to contribute - except this...

 

This is the best portrayal of Q throughout this whole process I have seen. Very descriptive ??

[duncanjwitham]

9 minutes ago, RipleyRich said:

They forced the rule change for a reason. That's my only logic and until I see evidence to the contrary I'm afraid that is what I fear.

There's no world where they're getting more than 25% though, and it's looking like they'll be lucky to even get that.  The rule change might make sense where clubs are doing the sort of pre-packed admins, where they just go into admin, wipe some debt out and come straight back out again.  But I'm genuinely not sure how often that's happening anymore, not with the points deductions etc that are in place now.

For a company that's genuinely in financial distress (like we clearly are), forcing them into liquidation basically because of a temper-tantrum, is not going to achieve anything.  It's not going to get them any more cash right now, and it's not going to stop other clubs messing up in the future, because in most cases, the owners that push them into that kind of mess don't have to deal with the consequences of it.

[BramcoteRam84]

@RipleyRich HMRC do deals with administrators all the time. They won’t choose receiving nothing to make a point to other football clubs in the future. Furthermore when this was debated in parliament you had a government minister saying HMRC won’t be an issue. You keep banging on about it but it’s not the main issue.

Clearly the stadium is the biggest issue - some of the unsuccessful parties (Kirchner and Binnie) have been very clear on this. Mel is the problem, if (and it’s a big if) he got in line then everything else would be sorted. 

[Tombo]

1 hour ago, i-Ram said:

Your response made me smile Tombo. Not seen the image before. Not sure that was what caused the reaction though; I think it was more likely the fact that after giving it large, you have absolutely nothing to back it up. 

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

[RipleyRich]

2 minutes ago, duncanjwitham said:

There's no world where they're getting more than 25% though, and it's looking like they'll be lucky to even get that.  The rule change might make sense where clubs are doing the sort of pre-packed admins, where they just go into admin, wipe some debt out and come straight back out again.  But I'm genuinely not sure how often that's happening anymore, not with the points deductions etc that are in place now.

For a company that's genuinely in financial distress (like we clearly are), forcing them into liquidation basically because of a temper-tantrum, is not going to achieve anything.  It's not going to get them any more cash right now, and it's not going to stop other clubs messing up in the future, because in most cases, the owners that push them into that kind of mess don't have to deal with the consequences of it.

I'm not going to post the link again because quite frankly I don't have time for the repeated abuse. But I just go back to Quantuma's own article on the subject. I'm sure they know better than the vast majority of us on here.

[RipleyRich]

5 minutes ago, BramcoteRam84 said:

@RipleyRich HMRC do deals with administrators all the time. They won’t choose receiving nothing to make a point to other football clubs in the future. Furthermore when this was debated in parliament you had a government minister saying HMRC won’t be an issue. You keep banging on about it but it’s not the main issue.

Clearly the stadium is the biggest issue - some of the unsuccessful parties (Kirchner and Binnie) have been very clear on this. Mel is the problem, if (and it’s a big if) he got in line then everything else would be sorted. 

Is the Stadium the biggest issue due to the amount required to settle HMRC, and therefore pushing the price up beyond realistic values?

I don't know, I'm just playing Devils Advocate. As I said in my last post, Quantuma wrote an article about it themselves, suggesting that the change in status for HMRC made rescuing football clubs a thing of the past. Why would they write that?

[CornwallRam]

3 hours ago, Big Trav said:

Also to clear up a bit of confusion there are 2 loans from MSD. One is secured against the stadium but this is a personal loan directly between MM and MSD. The loan between DCFC and MSD is 20 million and secured against the training ground and other facilities. So MM wants to pay off his personal loan with the stadium sale. Derby need to pay off their loan too. It’s a messy situation. 

I don't think you are correct.

There were indeed two loans, but there might actually be three now.

The first is reportedly for £17.5m and is secured against the stadium, the club, the academy and the club's share of the catering business. 

The second is for a smaller amount, and be more like a flexible loan with an agreed maximum. This is secured against the lease and buildings at Moor Farm and the player registrations. 

MSD have also part funded the administration costs. This could be a separate loan, or it could be from drawing on extra funds from the 2nd loan. 

Quite how these loans add up to the £22m that Mel needs to pay off MSD is not clear. Is it just the two totals added together, or is it loan 1 plus 3 and the Moor Farm loan is a separate negotiation? 

[duncanjwitham]

4 minutes ago, RipleyRich said:

I'm not going to post the link again because quite frankly I don't have time for the repeated abuse. But I just go back to Quantuma's own article on the subject. I'm sure they know better than the vast majority of us on here.

If it's the article I'm thinking of (https://www.quantuma.com/insights/rescuing-football-clubs-thing-past), it's clearly either out of date, or just wrong. It's from 6+ months before the law change even came into effect, so I suspect it's speculation based on how the law might work in practice, and it hasn't quite played out like that.

The assumption in that article is that HMRC debt cannot be compromised and must be paid in full. That absolutely doesn't match with what Quantuma are saying now, and what seems to be happening on the ground.  If HMRC were demanding the full £27m+, then we wouldn't even be talking about whether £30m bids would be enough, we'd have been liquidated months ago.

[RipleyRich]

I found the below on another site.

The information I understand is taken from a newspaper article in January this year. (I cannot vouch for its accuracy).

Taking the figures given for MSD loan as being the Stadium and its reputed cost to purchase from MM, the eventual numbers look remarkably like the figures being spoken about of those required to purchase the club. The amounts to be paid seem to be assuming 25%.

Again,  I cannot vouch for the validity of these figures.

 

 

The potential debts seem to be in the region of:

Football Debt - c£10m Amount to be paid - £10m
HMRC - £29.3m Amount to be paid as a preferential creditor - £29.3m
MSD Loan (MM guarantor) Amount to be paid - £20m
Non Secured Creditors £5-£10m Amount to be paid £1.25m+
Other MSD soft loans £10-£15m Amount to be Paid £2.5m+
Administrators Fees currently c£3m Amount to be paid £3m

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!

So the reality to buy the club in terms of settling the debt is:

Football Debt - £10m
HMRC - £29.3m
MSD Loan - £20m
Non Secured Creditors £1.25m+
Other MSD soft loans £2.5m+
Administrators Fees £3m

Grand Total £55m+

[CBRammette]

41 minutes ago, RipleyRich said:

They forced the rule change for a reason. That's my only logic and until I see evidence to the contrary I'm afraid that is what I fear.

They are usually pragmatic but I think if Mel is part of a bid or tries to buy us out of admin they will play hardball. And they would be right to do so!

[FlyBritishMidland]

3 hours ago, Sparkle said:

Correct me if I am wrong, back in January the Binnie brothers offered £30 million for the club not including the stadium, isn’t that the same as £50 million currently? - why was that offer rejected by the administrators?

At that time the MFC issues hadn’t been settled.  The EFL had already rejected a plan at the start of January as it didn’t account for that issue.  I think Binnies offered £28M plus lease Pride Park but didn’t plan to deal with MFC so it couldn’t be accepted.

Edited April 1, 2022 by FlyBritishMidland

[Sparkle]

3 hours ago, RadioactiveWaste said:

We'd be under a punitive "business plan" regardless as a consequence of being in administration, if we exit administration in such a way as to incur a points deduction that business plan is going to be even more restrictive (and punitive).

Strange isn’t it that a business plan imposed by the EFL would in all probability discourage any bidder from bothering - something wrong there in terms of keeping a business going 

[Sparkle]

2 hours ago, Eatonram said:

I recall 28m without the stadium (they described this as the "asking price) followed by an increase to 30m but they expected the stadium for the extra 2m. Make of that what you will.

Yep after the administrators sold lots of promising youngsters and lost any hope of realistically staying in the championship - I would have reduced my bid as well 

[RadioactiveWaste]

3 minutes ago, Sparkle said:

Strange isn’t it that a business plan imposed by the EFL would in all probability discourage any bidder from bothering - something wrong there in terms of keeping a business going 

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.