Who is this security guy and what role has he played in this? Is he a goodie or a bad guy?
Essentially a moneylending business, that appears to have advanced we think £180k (that was the figure bandied about) and doubtless on very onerous interest rate terms at around the time OK stood down but before (seemingly) Moore et al were appointed. When Whitcu*t was pretty well in sole charge. At least that is how it seems, although only the key protaganists know the full tale.
Unlear what that loan was for. Various different alternatives have been bandied around. Serves little purpose dwelling on the reasons here - if you as an individual took out a payday loan (as this seems to be the corporate equivilent of) then the reasons whay you took it out are irrelevant. What matters is that you have to pay it back, and quickly, or you are in deep doo doo at short order. And can expect a visit from some gentlemen wishing to discuss repayment with you in a relatively robust manner.
In this case, it went further. The lender was given security over the club's assets. This is a bit like a mortgage - debtor does not pay, you can take steps to seize the house to get repaid. That is called a "fixed charge". In this case, the lender had what is called a "floating charge", which means he cannot (now) just step in an seize assets (that used to be called receivership, and was effectively canned a couple of decades ago in favour of administration). Instead, his usual remedy is to apply to the High Court for the appointment of an administrator, to take control of the business and seek to settle the creditors (in order) whilst trying to preserve a business as a going concern.
And that is what has happened, it would seem. The moneylender, holding a floating charge (also called a "debenture") applied to the High Court on Friday morning, and secured the appointment of an administrator. At least, that would appear to be the legal form of it.
Its actually even more complicated than that, because it seems someone also sold these guys 1 share out of he 100 shares in issue. So they are also a shareholder in OKB.
Oh what a tangled web we weave...
As for whetehr he is a goodie or a baddie? Are Wonga goodies or baddies? Who is the real baddie? The lender? Or whoever borrowed the money in the first place?
But, back to the unsecured creditors. It is quite possible, and not totally uncommon, for the new company to voluntarily agree to settle with some or all of the unsecured creditors.
Sensible if a points deduction is to be avoided. Having avoided a deduction, might not the newco then make a pretty derisory offer to these unsecured creditors who presumably couldn't do a right lot about it. Which to my mind is why a points deduction should be made. I've no axe to grind with Bradford but for the RFL to do otherwise would put it in an incredibly weak position in terms of governance.
After going going into Administration for the second time in next to no time, it should be 6 points deduction for Bradford Bulls (or 4 points if ALL creditors are paid off in full).
How any Bradford supporter can put some invented label on Mr Khan (like "non-rugby" creditor) is unbelievable. He bought your flip pin' team for you last year for goodness sake!
What's more, if OK Bulls Ltd ultimately suffers insolvent liquidation (goes bust) then Bradford should be relegated to the bottom division.
After going going into Administration for the second time in next to no time, it should be 6 points deduction for Bradford Bulls (or 4 points if ALL creditors are paid off in full).
How any Bradford supporter can put some invented label on Mr Khan (like "non-rugby" creditor) is unbelievable. He bought your flip pin' team for you last year for goodness sake!
What's more, if OK Bulls Ltd ultimately suffers insolvent liquidation (goes bust) then Bradford should be relegated to the bottom division.
You really need to start understanding how all this works. Want me to give you some "useful links" on corporate insolvency?
Of course OKB will be liquidated in due course. It is inevitable. There is no other outcome. Totally irrelevant, since the act of insolvency is the appointment of the administrator. Liquidation merely kills the corpse off for good.
After going going into Administration for the second time in next to no time, it should be 6 points deduction for Bradford Bulls (or 4 points if ALL creditors are paid off in full).
How any Bradford supporter can put some invented label on Mr Khan (like "non-rugby" creditor) is unbelievable. He bought your flip pin' team for you last year for goodness sake!
What's more, if OK Bulls Ltd ultimately suffers insolvent liquidation (goes bust) then Bradford should be relegated to the bottom division.
Sensible if a points deduction is to be avoided. Having avoided a deduction, might not the newco then make a pretty derisory offer to these unsecured creditors who presumably couldn't do a right lot about it. Which to my mind is why a points deduction should be made. I've no axe to grind with Bradford but for the RFL to do otherwise would put it in an incredibly weak position in terms of governance.
Another sensible, reasoned contribution IMO. Just wish they were all like Early Bath and yourself.
Its a very valid point. I would hope and expect the RFL will obtain formal, enforceable assurances from the board regarding the payment proposals. And only then decide on the question of points deduction or other sanctions. Indeed, if you read Moore's latest statement, he seems to recognise precisely that, in apologising for jumping to conclusions earlier about this issue.
Indeed, I cannot see other clubs wearing it if this is not the case?
I believe there are precedents for this in the cases of other clubs - e.g. those who used the CVA route to resolve their financial situation.
Seemingly. But his only justification for his arguments seems to be because he said it should be so. And not helped by clearly not understanding how corporate insolvency and recovery works, or the distinction in substance between owner and creditor.
Compare and contrast, as I said, with the likes of Early Bath and Clearwing on here, who raise important and valid questions, calmy and reasonably with no histrionoics, and explain clearly what and why.
Adey - Have to say I dont agree with you here and cannot understand your logic to ignore the monies inserted by OK.
In effect he was a Director. He then paid in monies which were his or monies from his Company. I am not privy to the split.
So the Administrator will see outstanding monies to OK in his Loan account and also possibly a Trade Creditor for monies from his business.
Surely he cannot decide 'Oh Im not going to pay him - or pay them - hes honour bound to act correctly.
The saga could run and run and although my club should be OK (touch wood) I can see a huge revolt amongst such as Wakey, Cas, London fans etc.
I think we are confusing two separate points here.
You are totally correct in what you say, as far as the administrator is concerned. To him, a creditor is a creditor is a creditor. The only distiction is in pecking order.
Preferential creditors get paid first, but since these are nowdays usually limited to certain employee claims, and all the employees were TUPEd across to BB2014, there are unlikely to be any of those. Next come any debenture holders secured by floating charge. In this case, the moneylender. He looks certain to be paid, I'd say, out of the proceeds of the asset sale to BB2014 and any book debt collections, as well as any existing cash at bank. He will of course have known this, hence I am sure him taking the steps he did to realise his security.
Then in this case, it gets interesting. The rest are usually "unsecured creditors", and - if there is anything left after the Prefs and debenture holder/s have been paid, and of course the administrator (can't see this guy costing a fraction of the scandalous amount Gargoyle & co made, especialy given its a prepack) - then they get a dividend of x p in the pound, all treated equally.
Of course, if perchance a creditor has subordinated his debt behind the interests of other creditors (i.e. agreed by deed he does not get paid until all the other creditors have ben paid) then he ranks last anyway, and is invariably fekked. I raise this only because it is not uncommon, when a business is financed mainly by loans instead of equity (as OKB was) that lenders, key suppliers or other stakeholders/regulators require such debt to be subordinated. I do not know if such was the case here, but if it was then of course it shoots down mcuh of the inaccurate arguments that some people are putting up anywauy).
But, back to the unsecured creditors. It is quite possible, and not totally uncommon, for the new company to voluntarily agree to settle with some or all of the unsecured creditors. That is what BB2014 have said they intend to do, if I understand it correctly. In such cases, they can decide who to pay if they want, since it is voluntary. (if there ARE any specific rules here, I have not come across them professionally before but would welcome someone improving on my answer). So they could elect to settle with normal creditors, I presume including HMRC (in fact, it had BETTER be) but not OK, or for that matter any other unusual or non-rugby creditors.
I would presume the price BB2014 paid for the assets will have reflected any such intent, since by settling unsecured claims they reduce the amount that the administrator has to seek to settle, and thereby improve the dividend prospects of any creditors that remain in the old company.
If you want a recent precedent that I am familair with, go check out the administration of Brintons Carpets (Major, long-established carpet manufacturing group) not long ago. The bsuiness was sold in a prepack (as here) to a new vehicle (as here) owned by a US private equity group (no such luck...) that undertook to settle all the normal supplier claims but not the financing deb and any funnies. Thereby saving the business, causing no loss to suppliers, HMRC etc, maintaining the goodwill of suppliers and stakeholders, and ensuring the loss fell where it should have - on the owners, quasi-owners and financiers of the business. I am hopeful we will see similar here. Time will tell, obviously!
PS: IMO Early Bath's post here is just the sort of sensible, considered contribution to the debate that should be welcome and appreciated. Compare and contrast with the unhelpful, subjective hissy fits from the likes of Wooden Stand.
Thanks for the detailed response Adey.
What would be the position if OK did NOT subordinate his debt? Would he be in the general body of Unsecured creditors? Also what would be the pecking order should his Limited Company made the advances? Also the MP. I would be surprised if the Administrator is allowed to prefer one unsecured creditor over another to be honest but I am not up to date with the Law to be frank.
I would just like to see a level playing field on this whole affair. My club (Salford) was in deep doo doo last year but MK saved us by agreeing to a CVA to pay everyone (John Wilkinsons loans as well by the way) over a period. So no points were deducted except for £10k and 2 points for having Daryl Griffin on as 14th man for 8 seconds!
What would be the position if OK did NOT subordinate his debt? Would he be in the general body of Unsecured creditors?
Yes.
Note that we none of us know if he might have done. I was speculating. If I was a bank lending to the club, It is certainly something I feel sure I would have insisted on, and in any case it could have been necessary to try and avoid a going concern qualification in the accounts. But it may be a total red herring.
Early Bath wrote:
Also what would be the pecking order should his Limited Company made the advances?
Legally, no difference between individual and corporate creditors. Treated the same. And in substance I would see no difference either.
Early Bath wrote:
Also the MP.
The invisible man? If he was owed any money, either personally or through a corporate vehicle, then again would be a normal unsecured creditor.
Early Bath wrote:
I would be surprised if the Administrator is allowed to prefer one unsecured creditor over another to be honest but I am not up to date with the Law to be frank.
Quite right. He is not.
Any "preference" would be by BB2014 volutarily settling with some or all of the OKB creditors. That is a matter between BB2014 and the creditors, and something the Administrator could take account of I guess in settling the price for the assets. AMybe the price to be finalised once the amount of the creditors paid is finalised? But, to the extent creditors remain unpaid and with the administrator, he has to declare the same % dividend - if any - to all of them.
Early Bath wrote:
I would just like to see a level playing field on this whole affair. My club (Salford) was in deep doo doo last year but MK saved us by agreeing to a CVA to pay everyone (John Wilkinsons loans as well by the way) over a period. So no points were deducted
So I think would everyone, tbh. And I think that is what may well eventuate, IF BB2014 settles with all the normal creditors in a similar way to how you did through the CVA. FRor the avoidance of doubt, btw, a CVA is an act of insolvency too. And you have just nicely explaine, for the benefit of the hissy-fitters, how an act of insolvency need not lead to a points deduction provided no financial advantage is gained.
Paying Wilkinson out was a good action, IMO. Given all he had done for the club over many years, and all the expenditure he had settled personally. The situation here with OK is probably a lot messier, for a whole raft of reasons debating of which on here would at best be unhelpful and including the involvement of others like the MP. Wilkoinson was clearly in there for the long haul, and not looking to get his money out at an early oipportunity. So I am very glad for him that he was settled with.
Early Bath wrote:
except for £10k and 2 points for having Daryl Griffin on as 14th man for 8 seconds!
Chuffing ludicrous IMO, and totally disproportionate. Had I been the RFL, I'd have maybe said something like "right, we are going to pick a match and a player, sort of at random but similar in both cases to the one in question. And a time. And not tell anyone the details. Except the referee of the match. And then, at the appointed time, you got said man sent to the sin bin. Something like that, anyway. And, if he was just about tro score or stop a try at that point...well so be it. But anyway...
Hope the above helps a bit?
Who is online
Users browsing this forum: No registered users and 82 guests
REPLY
Please note using apple style emoji's can result in posting failures.
Use the FULL EDITOR to better format content or upload images, be notified of replies etc...