Re: Ownership of Club Changes : Sun Feb 02, 2014 10:58 pm  

Ferocious Aardvark wrote:

the whole point of the principles of deductions etc is to stop clubs using admin as a means to shaft all their creditors. If the Bulls do not shaft their creditors, then on what basis should they face points deduction?

No.

There is a 6point penalty for going into Administration.

Reason? Going into Administration demonstrates that a club is sailing (financially) closer to the wind than the RFL wants.

If you go into Administration but pay off your creditors, then you get the points deduction reduced to 4.

Don't forget, it wasn't the directors of OK Bulls (who were appointed by Mr K) that called In the Administrator. It was a major creditor (who clearly hadn't been repaid asper the agreement with the club.).

The Bulls directors (and now owners) have said they won't pay a penny to the person who financed their 2013 season.

How much clearer can the case be for a 6 point deduction as minimum punishment?

Don't forget Adeybull, that a person can be both the owner and a creditor of a Company at the same time.

Re: Ownership of Club Changes : Mon Feb 03, 2014 12:11 am  

Wooden Stand wrote:

There is a 6point penalty for going into Administration.

No. A MAXIMUM six-point penalty, I believe?

Wooden Stand wrote:

Reason? Going into Administration demonstrates that a club is sailing (financially) closer to the wind than the RFL wants.

No. Going into administration demonstrates either (and in almost every case) that the club is insolvent, or (very occasionally) that it is the only way to resolve an impasse between shareholders or similar. In this particular case, it looks very much like one of the latter, precipitating one of the former.

I do wish you would read up a bit on corporate insolvency. If a club goes into adminsitration because it is insolvent, it is not "sailing closer to the wind than the RFL wants". It has gone bust, whether through sailing too close to the wind or bad luck or catastrophic event or just plain trying and trying but not making enough to keep going.

Wooden Stand wrote:

If you go into Administration but pay off your creditors, then you get the points deduction reduced to 4.

No. If you pay off your creditors, then there is no financial advantage gained and therefore the penalty could be remitted to zero.

It is not the act of going into administration that is the issue, or triggers a penalty. Any more than entering into a CVA (like Salford did) is. It is obtaining advantage by not having to pay creditors, especially HMRC. Salford entered into a form of insolvency too - a CVA - but all penalty was remitted as I understand it because arrangements were made to pay the creditors, and so no financial advantage was gained.

Wooden Stand wrote:

Don't forget, it wasn't the directors of OK Bulls (who were appointed by Mr K) that called In the Administrator. It was a major creditor (who clearly hadn't been repaid asper the agreement with the club.).

Yes. For once. A very unusual creditor, who was able to petition the High Court to appoint an administrator by holding a floating charge granted in very strange circumstances. But what is your point? If anything, taken at face value, appointment by a creditor not the directors would suggest it was not the directors' (or owner's) intent to go into administration? Therefore, they could be less culpable than in most other cases (like Bulls before, or Wakey) where it is the directors who do it? And, for all you know, they were fighting desperately to avoid that eventuality, but were stymied by a creditor not prepared to negotiate because he held all the cards? As indeed this one seemingly did. Do you know that was NOT the case?

Wooden Stand wrote:

The Bulls directors (and now owners) have said they won't pay a penny to the person who financed their 2013 season.

No. They have said they will not pay a penny to the person who owned the club, FOR the club.

I DO wish you would get it into your head that whether the guy put money into the club to buy shares (as most folk assumed he had) or lent money to the club hoping to get it back out again sometime (how many owners achieve that?) the substance is that he invested £x in the club. Had he put the money in as share capital, there would have been no loan account and you would not be arguing the point. Substance over legal form, mate. That is pretty well how accounts are drawn up, btw, and increasingly how tax is paid. Substance over legal form. No difference here.

He invested in the club (having bought it for a song anyway, free of debt) and on his watch it lost (we were told) £1.2m. So that wiped out his investment. So he cannot expect a cent back. Whatever the legal form of his investment.

Wooden Stand wrote:

How much clearer can the case be for a 6 point deduction as minimum punishment?

You have not made any clear case. Not helped by your incomplete understanding of the law and accounting.

You have already said (wromngly) that the punishment for administration is 6 points. So you cannot anyway expect a punishment heavier than that, regardless.

Wooden Stand wrote:

Don't forget Adeybull, that a person can be both the owner and a creditor of a Company at the same time.

Is there anything else I have already known for about the 40 years I have been in this line of work, that you wanted to tell me?

See my earlier point about substance over legal form. But also, do you know what the terms of his loan to the club were? Or indeed any other terms that he might have been party to? In most cases like this - see Huddersfield and Davy a few years ago for an identical situation - the owner is required to suordinate his loan to the claims of the other creditors. And undertakes not to seek repayment unless the company is solvent and in a position to make repayment. He has to do that to enable the accounts to be drawn up on a "going concern" basis, absent which he is in all SORTS of trouble. So please, don't keep bnging this drum about him being just another creditor. He was the owner, and the form that his investment in the club took should make no difference to how he should rank for repayment - last.


Having said all that, I am happy to acknowledge that you have made an attempt here to explain your stance. That is why I have taken the time to try and rebut your points reasonably - it takes much longer to do that than to deride your antagonist as a know-nothing fekkwit. I very much doubt you are that, to be honest. I suspect you do indeed feel quite passionately about all this. If that be the case, then your points deserve a considered repsonse. That is what I have tried to give. They are my opinion and assessment and, like you, I too may well not be right on all points.

I can only comment on what I see in front of me, like anyone else. Like YOU. And I CAN fully understand how this all must look to an outsider, before looking into the particular facts of the case a bit more. The proof of the pudding will be the extent to which they seek to settle with the normal, genuine and valid creditors.

Re: Ownership of Club Changes : Mon Feb 03, 2014 12:25 am  

Wooden Stand wrote:

There is a 6point penalty for going into Administration.
.

I made my views on this matter clear earlier in the thread, and I'm not repeating them. However, on this specific point, I've heard the above proclamation a lot today, can you (or anyone) please show me a link anywhere where this (or any other mandatory punishment) is written down in rules or quoted as the rule by the RFL?. Genuine question as I'd like to read that press release/bylaw/operational rule. (not just press reporting of previous cases, what do the current rules say?)

Re: Ownership of Club Changes : Mon Feb 03, 2014 8:34 am  

Whenever a thread is being carpeted bombed by Adeybull in throttle out Alister Campbell mode it's time to step back and ask just what's going on here.

Firstly the difference between creditor and investor. Not only are they simply different, in this case they're even more different than might usually be found. Khan was NOT an investor in the usual sense of the word. He did not spot an opportunity to profit. Ferocious Aardvark has argued on numerous occasions that anyone buying a rugby league club intending to make money needs their bumps felt. Upon this basis ( as well as what we now know) his actions are better described as philanthropic. We don't know whether the loans were made at commercial rates of interest.

Secondly, we are being presented with the willfully misleading line that Khan bought the club 'for a song', debt free and ran up £1.2 million in debt. What he actually bought 'for a song' was a basket case which didn't have a Super League license, sponsors or indeed, any income whatsoever, apart from season tickets. Any accountant could tell you that in these circumstances the responsibility to build a squad would leave any club massively under capitalised, and in need of a serious injection of cash. The rugby league family responded by demanding that in order to receive a Super League license Khan had to agree to a 50% reduction in Sky money. I have been informed by two people, one close to the Leeds club and one close a rugby league journalist, that the clubs voted for this sanction because of they were outraged at the RFL lending £700k and then buying Odsal on the basis of a story which was not credible. In fact it is precisely the alarming parallel between what is happening on this board now and what happened in the aftermath of that disgrace which has prompted my post.

The thesis is, Omar Khan is to be seen as a standard business investor who has called it wrong and done his money. Tough poop. However, in the hours leading up to the liquidation of the club ask yourself, who put his signature on the dotted line? Not, Chris Caisley. Not, mysterious Chinese businessmen. None of the groups which Martyn Sadler referred to and certainly not Lord Peter of Hood (who coined that term?). What he actually bought was a huge financial responsibility and precious little realisable assets and/or income with no possibility the club would do anything other than continue to lose money. This was made clear at the time, that it would take years to make the club break even.

The decision of whether we get a points deduction is down to the RFL based on the information they have and I'm OK with that. The fans of clubs who have brought little to the comp can troll all they want - most of them want us destroyed an care little for fairness as they claim.

However, we have all seen what happens when sources from within the club use posters and in this case the clarion shrilling of a notorious poster who has been outed repeatedly bringing spin to this board disguised as fact. It is part and parcel of the disasters that have befallen us.

For Watt, Calvert and Moore, I wish you all the best. Khan's a big boy and what's happened might not be your fault and/or your responsibility and it genuinely might not be any of you now feeding this. The club comes first for me but don't think we're mugs to be fed a relentless diatribe of rubbish because every single one of us has been here before.

Re: Ownership of Club Changes : Mon Feb 03, 2014 9:02 am  

What I dont quite understand is that the winding up petition from Marc Green was for £ 180,000 and the deby to HMRC was £ 60,000. I do understand that the RFL have been involved in all negotiations pre administration. All parties will have know that all SL clubs are getting a one off payment next week of £ 300,000 from the new SKY deal, more than enough to pay Marc Green and HMRC. So why the need to go into administration.

Re: Ownership of Club Changes : Mon Feb 03, 2014 9:40 am  

Adeybull wrote:

I DO wish you would get it into your head that whether the guy put money into the club to buy shares (as most folk assumed he had) or lent money to the club hoping to get it back out again sometime (how many owners achieve that?) the substance is that he invested £x in the club. Had he put the money in as share capital, there would have been no loan account and you would not be arguing the point. Substance over legal form, mate. That is pretty well how accounts are drawn up, btw, and increasingly how tax is paid. Substance over legal form. No difference here.

That is, of course, on the assumption that it was a straightforward director's loan. But, for example, if the loans were made on a commercial basis from, say, a separate business owned by OK to the Bulls then that wouldn't that be an entirely different scenario ? I'm not saying that is the case BTW, just that it is a possibility - unless you know differently ?

Re: Ownership of Club Changes : Mon Feb 03, 2014 10:13 am  

snowie wrote:

MC got enough problems just lately with the reduction in stadium capacity with taking on bitching about some club that has fallen from stardom and is now on the verge of extinction.

he's fast learning to just get on with what's in front of him rather than behind him, the clubs aim is to improve on last seasons position a deal with each and every problem as they arrive

He doesn't have timers bitch about our club but had time for twitter?

IF the RFL did say Wakey would be relegated if they went into admin and now we're In admin I would be screaming from the roof tops of injustice. Put pressure on the RFL.

Re: Ownership of Club Changes : Mon Feb 03, 2014 10:25 am  

bellycouldtackle wrote:

What I dont quite understand is that the winding up petition from Marc Green was for £ 180,000 and the deby to HMRC was £ 60,000. I do understand that the RFL have been involved in all negotiations pre administration. All parties will have know that all SL clubs are getting a one off payment next week of £ 300,000 from the new SKY deal, more than enough to pay Marc Green and HMRC. So why the need to go into administration.

Indeed. And a good question.

Until the Statement of Affairs is filed, we can only speculate, that's the trouble. And try and interpret whatever information IS available.

So, I guess you would logically assume because the total amount owed, including OK's loan account, was more than the funds available to settle all the liabilities when due, even after any additional monies were available? But we do not know. In particular, we have no idea what the terms of repayment for OK's loan were, or whether they were linked to the share sale and purchase agreement? At least, I certainly don't.

There is a second situation, not necessarily reflecting insolvency, where administration can be used as a resolution process. That is where there are irreconcilable differences between shareholders. You might consider that that applied here (too?), although since the only shareholders were seemingly OK and Green's company, that does not necessarily stack up by itself either?

The wording of the original announcement seemed to indicate that, as a result of agreement to transfer the shares breaking down, Green took steps to enforce his security by putting the company into administration. Maybe he considered that, whilst the ownership issue remained unresolved, it was unlikely ANYONE would be able to settle his debt anytime soon? And, if interest was clocking up rapidly, then action was needed? I really have no idea, and so can only speculate.

The best guess I can come up with, and I said this in an earlier post somewhere, is that maybe it was down to a combination of all the above?

Re: Ownership of Club Changes : Mon Feb 03, 2014 10:27 am  

bellycouldtackle wrote:

What I dont quite understand is that the winding up petition from Marc Green was for £ 180,000 and the deby to HMRC was £ 60,000. I do understand that the RFL have been involved in all negotiations pre administration. All parties will have know that all SL clubs are getting a one off payment next week of £ 300,000 from the new SKY deal, more than enough to pay Marc Green and HMRC. So why the need to go into administration.

Weres this piece of info come from?

Re: Ownership of Club Changes : Mon Feb 03, 2014 10:38 am  

Derwent wrote: That is, of course, on the assumption that it was a straightforward director's loan. But, for example, if the loans were made on a commercial basis from, say, a separate business owned by OK to the Bulls then that wouldn't that be an entirely different scenario ? I'm not saying that is the case BTW, just that it is a possibility - unless you know differently ? It sure would be, yes. I agree. My assumption, based on everything that has been reported, is that it was OK putting his own money in, and not on any commercial basis. I think a key bit of evidence for this might be in the wording of this statement, and here too.. I've seen nothing to suggest it was a commercial loan at arm's length, and given the statement about cash flow issues and not being able to pay the salaries, I'm not sure who would lend money on commercial terms in such circumstances. And certainly on an unsecured basis. Mr Green's company made a loan, and took security for it. But yes, if nevertheless it was an arm's-length commercial loan, then it should be treated exactly the same as any other creditor. And the consequences for non-payment should be the same too.

Derwent wrote: That is, of course, on the assumption that it was a straightforward director's loan. But, for example, if the loans were made on a commercial basis from, say, a separate business owned by OK to the Bulls then that wouldn't that be an entirely different scenario ? I'm not saying that is the case BTW, just that it is a possibility - unless you know differently ? It sure would be, yes. I agree. My assumption, based on everything that has been reported, is that it was OK putting his own money in, and not on any commercial basis. I think a key bit of evidence for this might be in the wording of this statement, and here too.. I've seen nothing to suggest it was a commercial loan at arm's length, and given the statement about cash flow issues and not being able to pay the salaries, I'm not sure who would lend money on commercial terms in such circumstances. And certainly on an unsecured basis. Mr Green's company made a loan, and took security for it. But yes, if nevertheless it was an arm's-length commercial loan, then it should be treated exactly the same as any other creditor. And the consequences for non-payment should be the same too.