Slugger McBatt wrote:
There is another way of looking at it too.
Let's say it costs 1.2m to clear all liabilities and get a 2 point deduction, or even nil. What if the new owner gets the club at a rate of paying creditors 50p in the pound? If the owner is still willing to pay 1.2m, there is arguably 600K to invest in players, albeit with a more likely 4 point reduction.
I presume that's part of the balancing exercise. Your problem is, I guess, timing. If that simplistic formula had been applied in October, say, you could have recruited well.
I wish folk would appreciate that this debacle is NOT a straightforward "company gone bust" situation. It was not bust at the end of September, and would not have been bust had OK not abruptly stepped down for (genuine) health reasons at short order. He was continuing to feed cash in monthly. It has gone bust because he stopped fdeeding cash in once he (believed he) no longer owned the business, and because new prospective owners would and could not do a lot until THEY owned it. Impasse.
I suspect there WOULD have been a day of reckoning in the not too distant future, but it would not have been now.
This situation has arisen because of the deadlock in transferring the shares. That was stated pretty clearly the day the administrator was appointed. And because bloody Whitcu*t tried to sell the club to a moneylender and gave that moneylender a debenture, seemingly without anyone knowing what he was doing.
Administration has broken the deadlock. Indeed, that is one of the other, albeit far less common, purposes of administration.
The proof of all thius will be in the extent to which the next owners settle with the creditors. Almost always in an insolvent situation, the settlement is zero. Glover at Wakey settled a small proportion of their creditors (and not the £3/4m debt to HMRC...). That was a "normal" administration. Salford by contrast settled with all their creditors, using a CVA. But there was no owenership deadlock to break there.
If the Bulls' new owner/s settle with all the third party creditors, then this will be TOTALLY DIFFERENT to ANY OTHER ADMINISTRATION WE HAVE EVER SEEN IN RL. It will be more akin to what happened at Salford, where as we all know there were no penalties. And there will be NO JUSTIFICATION for any penalties here.
If the Bulls new owner/s settle at best only part of the third party creditors, then it will be more akin to what happened at Wakey. Although I reckon Glover may have repaid at best 20% of their creditors, and probably considerably less.
The proof of all this wil be in their actions. But please, people, recognise that this is actually a very different situation to what happened at Wakey, or indeed what happened here before.
Incidentally, very few companies actually exit administration. In almost all cases, the assets are transferred to a new company, the liabilities remain in the old to be settled to the extent possible, and the company is then liquidated.
