Re: Ownership of Club Changes : Fri Jan 31, 2014 3:21 pm  

Adeybull wrote:

...

If the normal trade creditors, and of course HMRC, were not to be engaged with and settlement with them made by the new company, then I would (I hope it never becomes "Will") have a serious problem. As I think would many others and certainly the RFL. Points deduction would seem inevitable in such circumstances. It is sounding like maybe that issue is indeed being addressed, but we need to await updates I guess.

Is there any legal mechanism for Bradford Bulls (2014) Ltd to pay liabilities due to HMRC but owed by Ok Bulls?

Re: Ownership of Club Changes : Fri Jan 31, 2014 3:31 pm  

childofthenorthern wrote:

Is there any legal mechanism for Bradford Bulls (2014) Ltd to pay liabilities due to HMRC but owed by Ok Bulls?

Almost certainly not.

But voluntary assumption of debts of an acquired business, to maintain supplier etc goodwill, is not uncommon.

A good largish recent example was Brintons Carpets. Fell over owing a shedload to suppliers, and a shedload to senior loan finance providers. Newco (bought by US private equity group Carlyle IIRC, in a prepack) stated they would settle all the trade and other creditors, but not the loans. That way, to everyone except the loan providers nothing much changed, nobody died, creditors were paid, employees were TUPEd across and the administrator got a nice fee for not doing a lot.

I am hoping this is very similar. Its clearly a prepack, and the statement the club has put out - whilst not as unequivocal as the one re Brintons - gives me hope that the intent is to settle with all the normal creditors. And, as with Brintons, just leave the loan unpaid.

Re: Ownership of Club Changes : Fri Jan 31, 2014 3:41 pm  

Seems clear that the saga of who owned or didn't own the club had become intractable, and you can understand it being impossible to plan and run a business when no actual transfer of the business/shares/whatever has been finalised nor ever seemed likely to be.

Something had to give and would have given eventually, and not in a good way, so the nuclear option of a pre-pack at least instantly wraps up all old loose ends, and is a clean-break new start for the new owners, who are exactly that.

It doesn't alter the position of the individuals who entered into various agreements, eg it wouldn't have any bearing on any action by OK against MM / RW for the money he says they agreed to pay. It does though completely divorce the club from any involvement whatsoever in that.

I presume that no ordinary creditors of the old OK Bulls will be shafted. At least I hope that's the intention. Wonder what will happen about the loan somebody took out from the security company?

Re: Ownership of Club Changes : Fri Jan 31, 2014 3:49 pm  

Adeybull wrote:

Almost certainly not.

But voluntary assumption of debts of an acquired business, to maintain supplier etc goodwill, is not uncommon.

A good largish recent example was Brintons Carpets. Fell over owing a shedload to suppliers, and a shedload to senior loan finance providers. Newco (bought by US private equity group Carlyle IIRC, in a prepack) stated they would settle all the trade and other creditors, but not the loans. That way, to everyone except the loan providers nothing much changed, nobody died, creditors were paid, employees were TUPEd across and the administrator got a nice fee for not doing a lot.

I am hoping this is very similar. Its clearly a prepack, and the statement the club has put out - whilst not as unequivocal as the one re Brintons - gives me hope that the intent is to settle with all the normal creditors. And, as with Brintons, just leave the loan unpaid.

If that were the case then the assumption of debts would have been done at the time of the transfer. If HMRC accept that, then logic suggests they'll withdraw their application for a winding up order against Ok Bulls. If that happens it's probably safe to assume that's the case.

Re: Ownership of Club Changes : Fri Jan 31, 2014 3:57 pm  

Can the throng of Asian businessmen willing to invest in rugby league please form an orderly queue.

Re: Ownership of Club Changes : Fri Jan 31, 2014 3:59 pm  

Ferocious Aardvark wrote:

Wonder what will happen about the loan somebody took out from the security company?

The charge was a very comprehensive one against all assets of OK Bulls
If those assets have been sold/transferred to BB2104 then I must assume it is with agreement of the charge holder.
Perhaps it has been satisfied (paid) or a replacement one taken out by BB2014.

Companies house records will soon tell us.

Re: Ownership of Club Changes : Fri Jan 31, 2014 4:04 pm  

childofthenorthern wrote:

If that were the case then the assumption of debts would have been done at the time of the transfer. If HMRC accept that, then logic suggests they'll withdraw their application for a winding up order against Ok Bulls. If that happens it's probably safe to assume that's the case.

Its irrelevant now whether HMRC withdraw their application, since the appointment of administrators stays all legal debt recovery actions.

I assume that HMRC have not been paid because the directors were unable to make such payments while the ownership situation was unresolved. I'll not bore folk with the legals about fraudulent preferences etc unless someone needs help sleeping.

The administrator sells the assets - in this case clearly a prepack deal was in place ready to go when the button was pressed. The liabilities always stay with the old company. The administrator then uses the proceeds of sale of the assets to pay his own costs, then the creditors in ranking order.

(as an aside, the security company ranks ahead of other creditors because of its debenture, so will get paid first. Assuming that the assets were transferred for value, then there should be funds to do just that).

I would guess that the price Newco paid for the assets reflected a comitment to settle with the normal creditors - although that is pure speculation. The administrator has to be happy he got the best deal he could for the assets, but also has to balance that with his other responsibilities. Remember, the whole point of bringing in Administration as the default process for corporate insolvency (instead of receivership or liquidation) was to increase the number of failed businesses that could be saved as going concerns. This deal has cerrtainly achieved that objective 100%.

Re: Ownership of Club Changes : Fri Jan 31, 2014 4:09 pm  

If I had a penny for everytime a Wakefield fan crowbarred the word "iconic" into a sentence I'd have 72p now.

Re: Ownership of Club Changes : Fri Jan 31, 2014 4:09 pm  

bobsmyuncle wrote:

The charge was a very comprehensive one against all assets of OK Bulls
If those assets have been sold/transferred to BB2104 then I must assume it is with agreement of the charge holder.
Perhaps it has been satisfied (paid) or a replacement one taken out by BB2014.

Companies house records will soon tell us.

It was a standard floating charge ("debenture").

All charges and collection actions are stayed by administration.

The administrator then settles the creditors in ranking order. Floating charge holders first, after preferential claims (effectively, now crown preference is long gone, certain employee claims - irrelevant in this case as they will all have been TUPEd across to Newco).

The chargeholder's consent is not required to appoint administrators. A chargeholder can himself petion the High Court to appoint administrators, but that is a separate issue).

The charge will very definitely not transfer to Newco.

Re: Ownership of Club Changes : Fri Jan 31, 2014 4:29 pm  

Just standing back from the details - how should I as a fan feel about this?

1) The newco has proper accounting expertise on the board, so I feel comfortable this time round the numbers will have been done properly
2) Clearly the RFL has been involved from the start and should understand the situation.
3) Perhaps more importantly for the future OK Bulls Ltd had so much baggage attached to it that no sensible investor/sponsor would have touched it, so newco hopefully will allow genuine investors/sponsors to come in ( and I think there are some) without worrying any investment would go straight into a black hole.