by 3points »
06 Nov 2023 13:30
Norfolk Royal PieEater Norfolk Royal
No. Although HMRC cannot put a business or club into administration, the rules that apply automatically install HMRC as the preferred creditor should a business go into administration. If indeed HMRC are owed anything.
As I understand it creditors go for liquidation to get their money, administration is some attempt by directors to protect the company from that to carry on in some form. So HMRC or any creditor can get us liquidated and the reaction from that should be for Dai pay the creditor or to put us into administration. Liquidation or administration he loses money but less so in administration as there is a club to sell, but should be not choose administration the club is gone and (a phoenix club) would have to start again at the bottom.
Well, sort of. If a club or business goes into administration, the administrator who is independent of the directors or creditors, dishes out what money is left to firstly the HMRC, if they are owed, then to other creditors at usually reduced rates, ten pence in the pound for instance, so people owed at least get something.
This isn't quite correct. The administrator (who is formally an officer of the court) has legal obligations to maximise the realisations for the benefit of all creditors. creditors fall into three main categories
1. Secured
2. Preferential
3. Unsecured
Football is a little different and has "football creditors" which, I believe, have to be paid put as well (e.g. money owed to other clubs for transfer fees).
Per above Dai is a secured creditor as he has loans into the club secured by "charges" over the assets of the club (noting the stadium is outside of this security net). Any sold assets are then either deemed to be fixed or floating assets and that makes a difference as to who gets paid first from the distributions from the administrators (note the administrators and their legal advisors get paid their fees before anyone else gets a penny).
Using the above Dai will get the lion's share of any money realised from the sale of the club and its assets. It s my understanding that HMRC also has to be paid in full too (it ranks alongside the football creditors).
Administrators are usually either appointed by the secured creditor (usually a bank or lender) or the directors. In this case Dai is both the secured lender and also a director (along with Pang, his sister, Narin Niruttinanon and Graham Odell). Therefore it is highly unlikely the directors will act against Dai and he'd have a majority with him, Pang and his sister in any board meeting.
It is technically possible for any creditor to petition the courts and ask for an administration order to be made. It is pretty rare and only used in aggressive circumstances when nothing else works. However, it is in the judge's discretion as to whether they agree with the creditor and put the company into administration. In this instance Dai also has the option to pay off the creditor in full meaning they are no longer owed money.
The big problem we will face if we enter administration is how the club will be funded through the period of administration. The administrators will try to reduce costs and align income with payments as best as possible. Everything bar the bare essentials will be cut, including employees and probably the academy). It may be there is an interested party who will help fund the club while it completes due diligence and can execute a transaction (as I think was the case with Derby).
Happy to answer questions as this is my field of work.
Last edited by
3points on 06 Nov 2023 13:34, edited 1 time in total.
