The Football Creditor rule is explicit, simple, and solves all of Derby's issues

[kevinhectoring]

3 hours ago, i-Ram said:

Bit more time on my hands today and I have copied in @RoyMac5and @Tamworthram and @Davidtoo. What I suggest here might not be correct as I am no insolvency expert, and I am not party to any of the negotiations. So this is simply my understanding. Probably no better or worse than the thoughts of @duncanjwithamor @Ghost of Cloughwho seem well read on the matters.

Boro and Wycombe are not creditors. Presently they have only submitted unproven claims to be considered by way of arbitration under EFL Rules. To become creditors, let alone football creditors, an arbitration process has to proceed, all facts have to be considered, and a decision is made. That decision we would all like to think will come back that the claims have no merit, but it is possible that an award could be made in favour of the two parasites. At that point they could argue that they are creditors, and I think at that point they could justifiably argue that they are therefore football creditors under EFL Rules.

Legal proceedings cannot commence against the Club as it is in administration, so Q (or a court) have to give consent to allow legal proceedings to go ahead. Q have argued that no proceedings can commence - whether it be via the EFL arbitration route or via the legal route of civil proceedings - arguing that statute is with them. In an administration process under the Corporate Insolvency and Governance Act 2020  Q’s position was that no arbitration could be commenced, as an automatic moratorium within the 2020 Act prevents the arbitration from proceeding unless leave has been granted by the court. EFL countered and said statute is all well and good from an administrative perspective, but if the Club wants to continue playing in the EFL then they have to abide by the rules of the league membership. Effectively I think saying, you can save the Club but go play your football in another league!

Q were proposing to come out of Administration with a Class Cram restructuring option rather than CVA (according to Ian Redfearn of BAWT), disregarding totall the claims of Boro and Wycombe, and the new owner would set-up a NewCo to own the Club post-administration. This would have meant that Boro and Wycombe could not have once again claimed against the NewCo once the sale was concluded, and the claims died with the OldCo. That clearly isn’t going to happen now. Note we would have started next season at -15 points if the EFL had agreed to that course of action.

We are left in a position where Q reluctantly have agreed to go down the Arbitration route. That the claims of Boro and Wycombe will be considered. I imagine that might go the EFL LAP route, with Q keeping their legal powder dry until such time as they think they might want to invoke it under civil proceedings. If you like, keeping matters polite with the EFL for as long as they need to. Hopefully the LAP will find no merit in the claims of the Parasites, but if they say there is some award due then ‘arguably’ they become creditors for the award amount, although not necessarily under statute.   Depending on the size of the award Q would then need to consider next actions, taking into account whether a PB will pay the extra monies due, and whether existing and legislate creditors will be happy with the position, particularly if their take is to be further diluted. HMRC in particular might have strong views. If there is one plus side, it is likely if the Club does still exist after the Boro/Wycombe award is accounted for and dealt with, we are more likely to come out under a CVA with all creditors getting the minimum % for the EFL to not invoke the -15 point penalty. That would however mean Boro/Wycombe being paid 100% of their award as I think then Q to move forward would have to acknowledge them as football creditors.

I could try and guess the end game here, but I don’t think there is any further point speculating on the situation until we know the findings of the arbitration. 

Very offended you didn’t include me on your party invitation list I-ram. NFI ? 

The 2 have indicated their intention to proceed into arbitration, so Q regards them as contingent creditors. As do the buyers.  Q could simply disregard the claims, on the basis of legal advice, but despite the 3 QCs opinions, they are not willing to put their expensive choppers on the block. And anyway, the buyers need them sorting 
 

Many people on here are getting lathered up about the moratorium, and have convinced themselves that it somehow gets us out of jail free. It doesn’t. It’s a procedural measure, mostly aimed at debt recovery actions and winding up petitions. It doesn’t impact on the status of the parasites as creditors. It doesn’t make claims go away.  Your contention that the 2  can’t become creditors until they begin arbitration makes no legal sense that I can see. What do you base this on?

So when Q accused the EFl of acting counter to statute, they weren’t referring to EFL’s view on the moratorium. They were referring to the EFl view that a claim is not paid ‘in full’ if it is compromised by statute without the claimant supporting the compromise. It’s the point that was highlighted in Ben’s article 

As for predictions, I think we might shortly hear from Q that despite the EFL’s efforts it is not proving easy to get M and W to sign up to fast track arbitration. I think that constitutes a breach of M/W’s duty of utmost good faith but I doubt the EFl will have the courage to do anything much about that. Whether Q can apply to the court to get an order requiring the 2 to move forward I don’t know. Another possibility is we’ll hear the claims have settled. Ultimately that’s more likely I think than a hearing.

The EFl will now have seen at very close range what lengths M and W will go to to damage us. That will be to our advantage 

[PistoldPete]

2 minutes ago, kevinhectoring said:

Very offended you didn’t include me on your party invitation list I-ram. NFI ? 

The 2 have indicated their intention to proceed into arbitration, so Q regards them as contingent creditors. As do the buyers.  Q could simply disregard the claims, on the basis of legal advice, but despite the 3 QCs opinions, they are not willing to put their expensive choppers on the block. And anyway, the buyers need them sorting 
 

Many people on here are getting lathered up about the moratorium, and have convinced themselves that it somehow gets us out of jail free. It doesn’t. It’s a procedural measure, mostly aimed at debt recovery actions and winding up petitions. It doesn’t impact on the status of the parasites as creditors. It doesn’t make claims go away.  Your contention that the 2  can’t become creditors until they begin arbitration makes no legal sense that I can see. What do you base this on?

So when Q accused the EFl of acting counter to statute, they weren’t referring to EFL’s view on the moratorium. They were referring to the EFl view that a claim is not paid ‘in full’ if it is compromised by statute without the claimant supporting the compromise. It’s the point that was highlighted in Ben’s article 

As for predictions, I think we might shortly hear from Q that despite the EFL’s efforts it is not proving easy to get M and W to sign up to fast track arbitration. I think that constitutes a breach of M/W’s duty of utmost good faith but I doubt the EFl will have the courage to do anything much about that. Whether Q can apply to the court to get an order requiring the 2 to move forward I don’t know. Another possibility is we’ll hear the claims have settled. Ultimately that’s more likely I think than a hearing.

The EFl will now have seen at very close range what lengths M and W will go to to damage us. That will be to our advantage 

So do you accept Kevin my non expert understanding that the two parasites are creditors ( albeit contingent /indeterminate) . But not currently football creditors? So they can be included as creditors in a CVA or restructuring arrangement and have their claims compressed now? And that wouldn’t be a breach of any Efl rule because they are not currently football creditors?

 

 

[i-Ram]

34 minutes ago, kevinhectoring said:

Very offended you didn’t include me on your party invitation list I-ram. NFI ? 

The 2 have indicated their intention to proceed into arbitration, so Q regards them as contingent creditors. As do the buyers.  Q could simply disregard the claims, on the basis of legal advice, but despite the 3 QCs opinions, they are not willing to put their expensive choppers on the block. And anyway, the buyers need them sorting 
 

Many people on here are getting lathered up about the moratorium, and have convinced themselves that it somehow gets us out of jail free. It doesn’t. It’s a procedural measure, mostly aimed at debt recovery actions and winding up petitions. It doesn’t impact on the status of the parasites as creditors. It doesn’t make claims go away.  Your contention that the 2  can’t become creditors until they begin arbitration makes no legal sense that I can see. What do you base this on?

So when Q accused the EFl of acting counter to statute, they weren’t referring to EFL’s view on the moratorium. They were referring to the EFl view that a claim is not paid ‘in full’ if it is compromised by statute without the claimant supporting the compromise. It’s the point that was highlighted in Ben’s article 

As for predictions, I think we might shortly hear from Q that despite the EFL’s efforts it is not proving easy to get M and W to sign up to fast track arbitration. I think that constitutes a breach of M/W’s duty of utmost good faith but I doubt the EFl will have the courage to do anything much about that. Whether Q can apply to the court to get an order requiring the 2 to move forward I don’t know. Another possibility is we’ll hear the claims have settled. Ultimately that’s more likely I think than a hearing.

The EFl will now have seen at very close range what lengths M and W will go to to damage us. That will be to our advantage 

I am sorry you felt slighted. 

Please show me anything you have that supports the comment: Q regards them as contingent creditors.

You state: Your contention that the 2 can’t become creditors until they begin arbitration makes no legal sense that I can see. What do you base this on?  If you want to read my post again, do it slowwwwllly and not in a huff, I actually said that they would not become creditors until arbitration was complete, and an award had been made in their favour. This was presuming still that Q regarded any award agreed via an EFL organised LAP process as being full and final. Q could enter into such an EFL arbitration on the basis that they are proceeding in good faith, but cannot commit to accepting the final decision as they are not obliged to under statute.

As for your predictions. NFI. Not ducking interested. ?

[PistoldPete]

9 minutes ago, i-Ram said:

I am sorry you felt slighted. 

Please show me anything you have that supports the comment: Q regards them as contingent creditors.

You state: Your contention that the 2 can’t become creditors until they begin arbitration makes no legal sense that I can see. What do you base this on?  If you want to read my post again, do it slowwwwllly and not in a huff, I actually said that they would not become creditors until arbitration was complete, and an award had been made in their favour. This was presuming still that Q regarded any award agreed via an EFL organised LAP process as being full and final. Q could enter into such an EFL arbitration on the basis that they are proceeding in good faith, but cannot commit to accepting the final decision as they are not obliged to under statute.

As for your predictions. NFI. Not ducking interested. ?

Q did say they regarded them as contingent / indeterminate creditors .. this was in one of their radio talks months ago.

I heard it with my own ears.. but my failing memory can’t recall now which radio show it was .. radio Derby maybe or talk radio. 

[Ghost of Clough]

1 hour ago, kevinhectoring said:

The 2 have indicated their intention to proceed into arbitration, so Q regards them as contingent creditors. As do the buyers.  Q could simply disregard the claims, on the basis of legal advice, but despite the 3 QCs opinions, they are not willing to put their expensive choppers on the block. And anyway, the buyers need them sorting 
 

Your contention that the 2  can’t become creditors until they begin arbitration makes no legal sense that I can see. What do you base this on?

So when Q accused the EFl of acting counter to statute, they weren’t referring to EFL’s view on the moratorium. They were referring to the EFl view that a claim is not paid ‘in full’ if it is compromised by statute without the claimant supporting the compromise. It’s the point that was highlighted in Ben’s article 

As for predictions, I think we might shortly hear from Q that despite the EFL’s efforts it is not proving easy to get M and W to sign up to fast track arbitration. I think that constitutes a breach of M/W’s duty of utmost good faith but I doubt the EFl will have the courage to do anything much about that. Whether Q can apply to the court to get an order requiring the 2 to move forward I don’t know. Another possibility is we’ll hear the claims have settled. Ultimately that’s more likely I think than a hearing.

The EFl will now have seen at very close range what lengths M and W will go to to damage us. That will be to our advantage 

I believe the administrators have the legal right to reject the claims. It would then be down to the claimants to take it to court to have that decision overturned.

[kevinhectoring]

5 minutes ago, Ghost of Clough said:

I believe the administrators have the legal right to reject the claims. 

They do of course and they have 3 QCs opinions supporting that line. But it’s a brave position to take (professionals of this sort do not get paid for being brave they get paid by the hour) and anyway if buyers are spooked by the claims, the claims need to be addressed 

[kevinhectoring]

1 hour ago, i-Ram said:

Please show me anything you have that supports the comment: Q regards them as contingent creditors.

Well we know Q isn’t ignoring them and nor are the buyers. So, what sort of creditors might they be? I think there are 3 possibilities - current creditors, prospective creditors or contingent creditors. It’s obviously the latter,  until such time as: the claims are settled (when they become current creditors); or the claims are dismissed (when they become irrelevant, non-creditors); or they are ‘compressed’/‘compromised’  (but beware the football creditors rule); or until the claims are upheld (god forbid) 

[Day]

In this case, Derby County is seeking to use insolvency legislation to avoid having to defend the claims of Middlesbrough FC (which commenced initially in January 2021) and Wycombe Wanderers FC. Derby County considers those claims should not be treated as football related debts and that it would be wrong for the EFL to require the Club to have to continue to defend the claims as a condition of continuing membership in circumstances where they have been compromised by way of a restructuring plan. The EFL does not agree with that analysis.

https://www.efl.com/news/2022/february/efl-statement-Derby-county-update/

We know where the EFL stand now, they consider them to be football debts that we need to settle with Boro and Wycombe. 

Football debts which I may add have no contract, no agreement, just claims that have yet to be proven and no figure. 

By doing this the EFL is also welcoming future claims against clubs that breach P&S…..ok, we know that’s not true as they will rewrite the rules once this is all over.

Time for the high court then.

[RoyMac5]

2 minutes ago, David said:

We know where the EFL stand now, they consider them to be football debts that we need to settle with Boro and Wycombe. 

Football debts which I may add have no contract, no agreement, just claims that have yet to be proven and no figure. 

By doing this the EFL is also welcoming future claims against clubs that breach P&S…..ok, we know that’s not true as they will rewrite the rules once this is all over.

Time for the high court then.

Utterly outrageous.

Well this has opened the floodgates! Or will they wait for our demise and change the regulations again. Note all the talk was of their Rules, not what was lawful.

[i-Ram]

30 minutes ago, kevinhectoring said:

Well we know Q isn’t ignoring them and nor are the buyers. So, what sort of creditors might they be? I think there are 3 possibilities - current creditors, prospective creditors or contingent creditors. It’s obviously the latter,  until such time as: the claims are settled (when they become current creditors); or the claims are dismissed (when they become irrelevant, non-creditors); or they are ‘compressed’/‘compromised’  (but beware the football creditors rule); or until the claims are upheld (god forbid) 

Kevin I respect that you, and Pete, want to continue to project a keen level of knowledge on this matter of Insolvency, and it makes me wonder why you both are not earning £3/400 per hour as Legal Consultants, rather than constantly tapping away on this forum asking me questions which I keep stating that I don’t feel suitably qualified to answer.

You seem to want to back me into a corner regarding calling Boro/Wycombe creditors of some kind. Pete too thinks he heard Q label them contingent / indeterminate creditors .. “this was in one of their radio talks months ago”.

My position is they are not Creditors. My opinion. My opinion is based on 3 things.

1) I have never seen or heard Q refer to them as Creditors. Find me anything in print, either of you, where Q has said anything different.

2) There is Statute that confirms that any claims that were not subject to Arbitration prior to Administration can be struck out.

3) In November 2021 the Directors/Administrators were required under statute, and their legal obligations, to prepare and submit to a High Court (in Leeds for your information) two documents - a statement of affairs and a statement of proposals. These can be found published on Companies House website. Please revert to me if there is anything within those documents that refer to Boro/Wycombe as being Creditors. You might though alternatively want to write to the High Court to guide them on a glaring omission. 

The EFL as we know have said ‘duck’ Statute. They are a law to themselves because they have created some rules. Currently Q are challenging those rules, and entering it seems into some arbitration of sorts. What that is I do not know. But ultimately I think Q do have the legal right to take this matter back to the High Court and get judgment as to whether statute can and should prevail. They may however in the short term play along with the EFL charade to see what comes through that process, but as I have said previously it is highly unlikely they will commit to being bound by any LAP judgment regarding an award to Boro/Wycombe, principally because they would be breaking statute, and their duty to protect actual creditors, if they did so.

 

[RoyMac5]

4 minutes ago, i-Ram said:

The EFL as we know have said ‘duck’ Statute. They are a law to themselves because they have created some rules. Currently Q are challenging those rules, and entering it seems into some arbitration of sorts. What that is I do not know. But ultimately I think Q do have the legal right to take this matter back to the High Court and get judgment as to whether statute can and should prevail. They may however in the short term play along with the EFL charade to see what comes through that process, but as I have said previously it is highly unlikely they will commit to being bound by any LAP judgment regarding an award to Boro/Wycombe, principally because they would be breaking statute, and their duty to protect actual creditors, if they did so.

 

I guess we have to hope that HMRC wade in our our interpretation too? I find it stunning that the law of the land can be so easily ignored by what is basically a big boys club.

Edited February 3, 2022 by RoyMac5

[i-Ram]

10 minutes ago, David said:

In this case, Derby County is seeking to use insolvency legislation to avoid having to defend the claims of Middlesbrough FC (which commenced initially in January 2021) and Wycombe Wanderers FC. Derby County considers those claims should not be treated as football related debts and that it would be wrong for the EFL to require the Club to have to continue to defend the claims as a condition of continuing membership in circumstances where they have been compromised by way of a restructuring plan. The EFL does not agree with that analysis.

https://www.efl.com/news/2022/february/efl-statement-Derby-county-update/

We know where the EFL stand now, they consider them to be football debts that we need to settle with Boro and Wycombe. 

Football debts which I may add have no contract, no agreement, just claims that have yet to be proven and no figure. 

By doing this the EFL is also welcoming future claims against clubs that breach P&S…..ok, we know that’s not true as they will rewrite the rules once this is all over.

Time for the high court then.

Thanks David. I will flick over to that other thread about Administrators after I have had my evening meal / beer.

[PistoldPete]

29 minutes ago, i-Ram said:

Kevin I respect that you, and Pete, want to continue to project a keen level of knowledge on this matter of Insolvency, and it makes me wonder why you both are not earning £3/400 per hour as Legal Consultants, rather than constantly tapping away on this forum asking me questions which I keep stating that I don’t feel suitably qualified to answer.

You seem to want to back me into a corner regarding calling Boro/Wycombe creditors of some kind. Pete too thinks he heard Q label them contingent / indeterminate creditors .. “this was in one of their radio talks months ago”.

My position is they are not Creditors. My opinion. My opinion is based on 3 things.

1) I have never seen or heard Q refer to them as Creditors. Find me anything in print, either of you, where Q has said anything different.

2) There is Statute that confirms that any claims that were not subject to Arbitration prior to Administration can be struck out.

3) In November 2021 the Directors/Administrators were required under statute, and their legal obligations, to prepare and submit to a High Court (in Leeds for your information) two documents - a statement of affairs and a statement of proposals. These can be found published on Companies House website. Please revert to me if there is anything within those documents that refer to Boro/Wycombe as being Creditors. You might though alternatively want to write to the High Court to guide them on a glaring omission. 

The EFL as we know have said ‘duck’ Statute. They are a law to themselves because they have created some rules. Currently Q are challenging those rules, and entering it seems into some arbitration of sorts. What that is I do not know. But ultimately I think Q do have the legal right to take this matter back to the High Court and get judgment as to whether statute can and should prevail. They may however in the short term play along with the EFL charade to see what comes through that process, but as I have said previously it is highly unlikely they will commit to being bound by any LAP judgment regarding an award to Boro/Wycombe, principally because they would be breaking statute, and their duty to protect actual creditors, if they did so.

 

Thanks iram I have already said I am not an insolvency expert. I have recounted what Q has said and what i understood their position to be and this is now pretty much exactly confirmed by EFL in their latest statement . Whether you call them "claims" "creditors" or what a CVA stands for is white noise.. EFL has confirmed now that we are exactly where I thought we were... and it will go to Court.  

 

[Oldben]

29 minutes ago, RoyMac5 said:

I guess we have to hope that HMRC wade in our our interpretation too? I find it stunning that the law of the land can be so easily ignored by what is basically a big boys club.

Hmrc will not be riding to the rescue on this.

https://www.lawinsport.com/topics/features/item/football-creditors-rule-is-the-football-league-s-new-insolvency-policy-a-step-in-the-right-direction

The efl have not categorically stated that boro and Wycombe are to be treated as football creditors.

They have stated that they want Derby to either take their case to court or to arbitration.

In my opinion, the only way forward is a legal challenge. 

Arbitration is cheaper, and might solve the issue.

In any case the Administrators must stop running away from the issue.

As things stand if Boro and Wycombe win their case, Derby will face liquidation.

Then Derby can reform as a new club.

 

[RoyMac5]

Just now, Oldben said:

Hmrc will not be riding to the rescue on this.

Errr I meant in the fact that they will make clear that they are not willing to 'lose money' to Boro/WW claims.

[DerbysLane]

3 hours ago, kevinhectoring said:

They were referring to the EFl view that a claim is not paid ‘in full’ if it is compromised by statute without the claimant supporting the compromise.

Presumably the EFL are arguing we joined the league as Derby County F.C., not DCFC Limited (or whatever our limited company is called).  Changing the limited company becomes rather irrelevant then.  To hold onto the golden share we take on the responsibilities of the club including those of the old limited company.

I haven't got the exact wording of the EFL insolvency rules to hand, but 'in full' is pretty clear and straightforward wording.  It seems arrogant of the administrators to think they can get around this with a cross class cramdown.  It's very Mel Morris-esque in trying to be clever to get around the rules.

Edited February 3, 2022 by DerbysLane

[Oldben]

6 minutes ago, RoyMac5 said:

Errr I meant in the fact that they will make clear that they are not willing to 'lose money' to Boro/WW claims.

Football creditors rule trumps hrmc rights to be preferential creditors.

Hmrc have previously legally challenged the football creditors rule and have failed.

 

[Elwood P Dowd]

11 minutes ago, Oldben said:

Hmrc will not be riding to the rescue on this.

https://www.lawinsport.com/topics/features/item/football-creditors-rule-is-the-football-league-s-new-insolvency-policy-a-step-in-the-right-direction

The efl have not categorically stated that boro and Wycombe are to be treated as football creditors.

They have stated that they want Derby to either take their case to court or to arbitration.

In my opinion, the only way forward is a legal challenge. 

Arbitration is cheaper, and might solve the issue.

In any case the Administrators must stop running away from the issue.

As things stand if Boro and Wycombe win their case, Derby will face liquidation.

Then Derby can reform as a new club.

 

Arbitration would be quicker

[RoyMac5]

1 minute ago, Oldben said:

Football creditors rule trumps hrmc rights to be preferential creditors.

Hmrc have previously legally challenged the football creditors rule and have failed.

 

Well then they ain't gonna want to let that happen, nor are the other creditors.

[DerbysLane]

4 minutes ago, Oldben said:

Football creditors rule trumps hrmc rights to be preferential creditors.

Hmrc have previously legally challenged the football creditors rule and have failed.

 

The legal challenge failed I think because the new owner paid the football creditors, rather than the administrators.  I may have remembered that wrong though.