Plymouth into Administration

[Sleaford Shrimper]

Interesting quote from BBC website on Plymouth Argyle going into administration but surviving an HMRC winding-up order:

HMRC applied for a winding-up petition as without it they feared they could lose out on money owed to them by the club because of the administration process.

Normal administration procedure at football clubs sees secured creditors, including players and other clubs paid first and in full.

Whatever is left is then shared equally amongst the unsecured creditors, a group which includes HMRC.

By attempting to get a winding-up petition issued in the High Court, HMRC were hoping to prevent the application of the usual football creditor rules, thereby ensuring a greater share of the money for unsecured creditors.

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A statement from HMRC said: "This afternoon Mr Justice Peter Smith dismissed HMRC's application for permission to present a petition for the compulsory winding-up of Plymouth Argyle Football Club Ltd.

"During the hearing, the court learned that the directors had appointed administrators to take the club forward. HMRC is now considering the judgment, but will not be appealing.

"HMRC does not initiate winding-up proceedings of football clubs lightly. However we will not hesitate to do so when that is the right way to protect the country's tax revenues and other creditors from those who trade whilst insolvent and run up debts that they simply cannot pay."
​

I hope this does not happen to us, but it seems to indicate that going into administration can be used as a means of fending off the far more serious process of winding up.

 

[TravellingBlue]

"HMRC does not initiate winding-up proceedings of football clubs lightly. However we will not hesitate to do so when that is the right way to protect the country's tax revenues and other creditors from those who trade whilst insolvent and run up debts that they simply cannot pay."


That says it all for me. Without Sainsbury's we would be insolvent - even with Sainsbury's we cannot balance our books.

 

[Cricko]

That is the odd thing with all of this...we are in the legal terms of the word acting in an insolvent way...how are we allowed to carry on like this, I thought it was illegal to knowingly trade whilst insolvent?

This thread is off to the Finances Forum.

 

[Ayrshire Blue]

Rory Fallon had better be praying long and hard on this one.

 

[Beefy]

That is the odd thing with all of this...we are in the legal terms of the word acting in an insolvent way...how are we allowed to carry on like this, I thought it was illegal to knowingly trade whilst insolvent?

This thread is off to the Finances Forum.

According to Wiki:
Directors who continue to trade while insolvent may face disqualification under the Company Directors Disqualification Act 1986. Under the provision of this act, when a company goes into liquidation, the liquidator must make a report to the Disqualification Unit of the The Department for Business, Innovation and Skills (BIS) on the conduct of all directors. If the liquidator has come across conduct which makes the director unfit to be involved in the management of a company in the future (which things would include trading while insolvent) the Department for Business, Innovation and Skills will apply to the Court for an order disqualifying the director or directors from acting as a company director for a certain period.

http://en.wikipedia.org/wiki/Trading_while_insolvent_(UK)

So in a post-mortem, a liquidator could disqualify a Director for trading whilst insolvent. Of course that is too late for the business.

We're undeniably insolvent though. As are many football clubs.

 

[Firestorm]

Does anyone know any of the numbers ?

How much they have been losing of the past couple of years , Income, expenditure ?

 

[Firestorm]

Plymouth appear to be in a far better state than us Administration seems to be the "ringfence the debt" option

Basically its cash flow

2007
Income 8.2M
Costs 8.9M (incl 108 Staff wages 5.3M)
Loss 762K

2008
Income 8.6M
Costs 10.7M (Incl 119 Staff @ 6.4M)
Player sales 3.8M
Profit 1.1M

2009
Income 8.5M
Costs 13.8M (Incl 125 staff @ 7.5M)
Player sales 2M
Loss 3M

At 31/5/2009 they still had 10M of fixed assets

The accounts to 31/5/10 are late

 

[Beefy]

There was an article in the Guardian last week (linked to in the thread about Plymouth in the General Football forum) which goes through the numbers as well, FS. As you said, it's cashflow. They've got £1.5m in monthly outgoings in wages and tax on gates of 8,000, half of whom are season ticket holders.

Do you really think they're in a better state than us? They've got assets on the balance sheet but they are losing an almost unimaginable amount of cash every month - far more than we are.

 

[EastStandBlue]

There was an article in the Guardian last week (linked to in the thread about Plymouth in the General Football forum) which goes through the numbers as well, FS. As you said, it's cashflow. They've got £1.5m in monthly outgoings in wages and tax on gates of 8,000, half of whom are season ticket holders.

Do you really think they're in a better state than us? They've got assets on the balance sheet but they are losing an almost unimaginable amount of cash every month - far more than we are.

Plymouth have also taken next year's season ticket income already.

 

[Firestorm]

There was an article in the Guardian last week (linked to in the thread about Plymouth in the General Football forum) which goes through the numbers as well, FS. As you said, it's cashflow. They've got £1.5m in monthly outgoings in wages and tax on gates of 8,000, half of whom are season ticket holders.

Do you really think they're in a better state than us? They've got assets on the balance sheet but they are losing an almost unimaginable amount of cash every month - far more than we are.

No ,not having looked at the Guardian article..... they appear to have slipped a touch more dramatically than us, with the 2010 losses looking like being similar to 2009 (3M) and then the current season being next to no income. Very high salaries and debts to service and no way of realising their assets .

fairy godmother or fecked....