Again, one has to ask why other Directors on the Board with deep pockets sat on their hands and apparently refused to intervene when the players and staff were not being paid as the Chairman struggled to get a loan. It is a commercial disaster when a player with considerable re-sale value could claim his contract had been seriously breached and could simply walk away from the club. It is a huge own goal not only by the Chairman but the entire Board of Directors at the club.
No.
This isn't intended to be patronising so please don't read it so. But knowing how the operation of a limited company works is extremely important.
So, to start with the basics - firstly, a limited company means limited liability. That means that if the company goes under, the liability stops with the company and the directors and shareholders don't lose their own personal assets (unless they have given personal guarantees, which in the case of SUFC, apart from Ron I would imagine they haven't).
The company therefore has to stand or fall by it's own assets and liabilities. It MUST - by law - remain solvent in order to trade. That basically means that the assets have got to exceed the liabilities.
If the company is insolvent it ceases trading and is dissolved or wound up. Any assets are divided between the creditors at a pro rata rate. That's it. The end. But the directors generally can start again in another venture (unless disqualified from being a director, which is another subject) and have retained their personal wealth.
This is a very simplistic explanation of course.
But to be clear, there is absolutely
no legal requirement for a director to stick his hand in his pocket to keep a company afloat. None whatsoever. That's the whole point of it being a company. If there was, companies wouldn't need to exist.
Now, plenty of directors do, of course. But they are not required to, no matter how much they might want the staff and players paid at our beloved football club, for instance. The liability is limited, any excess debt dies with the club. They are not generally going to risk their own assets to pay company debt.
So, with SUFC in the position it was, no-one in their right mind - from a strictly financial point of view - was going to expose any more of their own personal wealth than already exists or might exist.
I've said it on here before, running a company can be extremely difficult and if you run it with a proper moral compass, then the likelihood is that when bad times come around, the company will go under. It is very easy to pay all your debts on time when the money is available to do so but when it isn't, it might be the right thing to prop it up with your own funds so that the staff and other creditors can be paid, but if bad times continue then sooner or later the money will run out. And then what? The company has to close, you've lost everything, possibly your house, you can't support your family and you have nothing left to start any new venture.
Yes, I know there's several people on here who say they have run businesses and who have paid all their debts in full and on time and if that's the case then very well done, but there must also have been other factors, whether that's starting a business at the right time and it working, taking over an existing business and it staying successful, being so small it is very easily manageable without having to pay staff or just being lucky and never having had hard times. But not all companies have that good fortune.
The company absolutely must succeed or fail on it's own merits.
and to me, this feels like the turning point in our season. Something huge has just come loose and I don't believe we will have the resources to fix this and make the playoffs.
