The Debt.

[Puskas]

Most of his debts are paper debts for accounting and tax purposes anyway. In that scenario, he can take around £15m from the club and simultaneously wipe the clubs debt off. Unfair to us? Sounds f*cking brilliant to me.

And DSB, what are the rules re:administration? Is it an automatic points deduction? And when? Now? Next year? They may be looking at short term pain for long term gain. We may have no chance of ever complying with FFP, or of ever stopping the debt from spiralling. I don't know. Its worth discussing rather than dismissing.

One thing I do know though, companies do not exist for any other reason than to serve their shareholders. ED is the majority shareholder of both. We need to be careful not to confuse moral arguments with financial ones.

Can you explain the mechanism by which he takes £15M from the club? I don't see it.

I presume by taking 10p in the pound on the £150M he's owed when he forces the club into administration.

What I don't understand, though, is why these are "paper debts for accounting and tax purposes". The club lost £50M last year by spending more than it received. This isn't a "paper debt" (whatever that means), it's money that has gone out of the club to third parties (mostly, I suspect, players, ex-Managers and agents) and that Eddie Davies has covered.

Similarly, as far as I recall, the majority of the Eddie Davies debt was incurred when he loaned the club money to pay off other debtors (the bank overdraft was the big one at the time, IIRC).

So I fail to see how taking the club into administration would help him get most of it back - surely, if he really just wanted his cash back, he'd start selling the assets (ground, hotel, training pitch, etc). It would leave the club buggered, but we're assuming he doesn't care about that, because of the presumed intention to go into administration. And he would get more back that way than the administration route.

[Prufrock]

Swhat I thought. If he wanted to lack it and get as much money back as possible we'd be selling anything that wasn't nailed down.

[Lord Kangana]

Somebody just mentioned he had the clubs best interests at heart. What serves that altruism better. A spiral of debt and fire sale, or administration?

[jaffka]

Swhat I thought. If he wanted to lack it and get as much money back as possible we'd be selling anything that wasn't nailed down.

This.

Before administration is the fire sale.

[Puskas]

Somebody just mentioned he had the clubs best interests at heart. What serves that altruism better. A spiral of debt and fire sale, or administration?

Neither - if his sole interest was the well-being of the club, he'd convert the debt to equity, as per Leicester recently.

If he wants his money back (or as much as he can get of it) he sells everything. Or cuts costs, tries to stabilise the finances and waits for repayment.

Administration doesn't make sense. It normally happens when the club is in debt to third parties who force the issue (and the owners want to get out as cheaply as possible). If the debt is owed to the owner it's not a sensible option.

[Lord Kangana]

But surely the purpose of administration would be to exercise an element of control and a way of keeping BWFC viable?

Is Davies even in a position to convert our debt to equity?

[Puskas]

But surely the purpose of administration would be to exercise an element of control and a way of keeping BWFC viable?

How does it do that? As has been pointed out, it means the club will be forced into a fire sale to raise money to pay off as much of the debt as possible. And day to day running is put into the hands of an administrator (hence the name...) - so he relinquishes control and sells off stuff he owns, cheaply, in order to pay himself a fraction of what he's owed. I ask again, why? It seems like the least sensible of all his options, for all parties concerned. Doesn't mean he won't do it - unlike most folk on here it seems, I have no insight into his motivations, intentions, etc. But I would say going into administration would be foolish.

Is Davies even in a position to convert our debt to equity?

He's the owner and the one who also owns the debt. So yes. Unless he desperately needs £150M for a new solid gold helicopter, or something. In which case, he really shouldn't have signed the agreement that he had to give a ten year notice period to call in the debt.

[BWFC_Insane]

People are talking about Eddie putting the "club into administration" as though it is a separate entity to everything else Eddie owns. But what he'd have to do is put Burnden Leisure with all it's assets into administration. Would an administrator be even allowed to cut a deal for a company in administration to pay back another company owned by the same person? Someone might have an answer to that, I'm unsure. But certainly I know other debts would likely be paid off first. Banks, for example.

[Dave Sutton's barnet]

Banks isn't much of a problem. (Insert "except for shots into the top corner" for hilarious fin-de-siecle humour.)

[bobo the clown]

People are talking about Eddie putting the "club into administration" as though it is a separate entity to everything else Eddie owns. But what he'd have to do is put Burnden Leisure with all it's assets into administration. Would an administrator be even allowed to cut a deal for a company in administration to pay back another company owned by the same person? Someone might have an answer to that, I'm unsure. But certainly I know other debts would likely be paid off first. Banks, for example.

If they are related businesses they will be treated as such. Only if they are distinctly different could there be a way of treating them otherwise .... & any attempt to front load bad money into the good would be fraud. As far as I am away Burnden Leisure or Moon??? are clearly related.

It should be that Eddies kettle thermostat business is kept out of the equation.

From memory, from the Portsmouth and Leeds situations, football has an odd relationship which put Football Debts as the first priority (transfer fees owing, player's wages and bonus' [think Sol Campbell] etc. ). Then the tax man, amazingly after the football stuff. Then Banks. Then individuals & Company's.

[Beefheart]

Most of his debts are paper debts for accounting and tax purposes anyway. In that scenario, he can take around £15m from the club and simultaneously wipe the clubs debt off. Unfair to us? Sounds f*cking brilliant to me.

And DSB, what are the rules re:administration? Is it an automatic points deduction? And when? Now? Next year? They may be looking at short term pain for long term gain. We may have no chance of ever complying with FFP, or of ever stopping the debt from spiralling. I don't know. Its worth discussing rather than dismissing.

One thing I do know though, companies do not exist for any other reason than to serve their shareholders. ED is the majority shareholder of both. We need to be careful not to confuse moral arguments with financial ones.

What do you mean when you say 'paper debts'? I imagine the debts come from cash injections to cover the massive losses ever year (Dr Cash Cr Loan). The only think I imagine would be 'paper' would be the £15m (where is this figure from?) fee charged each year which I'd guess would just be tacked on to the principal (Cr Loan Dr P&L), otherwise what would be the point? 'I'm going to take money out of the club just to put more back in'?

[Beefheart]

People are talking about Eddie putting the "club into administration" as though it is a separate entity to everything else Eddie owns. But what he'd have to do is put Burnden Leisure with all it's assets into administration. Would an administrator be even allowed to cut a deal for a company in administration to pay back another company owned by the same person? Someone might have an answer to that, I'm unsure. But certainly I know other debts would likely be paid off first. Banks, for example.

If they are related businesses they will be treated as such. Only if they are distinctly different could there be a way of treating them otherwise .... & any attempt to front load bad money into the good would be fraud. As far as I am away Burnden Leisure or Moon??? are clearly related.

It should be that Eddies kettle thermostat business is kept out of the equation.

From memory, from the Portsmouth and Leeds situations, football has an odd relationship which put Football Debts as the first priority (transfer fees owing, player's wages and bonus' [think Sol Campbell] etc. ). Then the tax man, amazingly after the football stuff. Then Banks. Then individuals & Company's.

Are you sure about this bit? Perhaps after secured creditors, i.e if a bank loan is secured against the stadium then they would be entitled to the proceeds of sale of that asset before anyone else (if anything left).

[Lord Kangana]

But surely the purpose of administration would be to exercise an element of control and a way of keeping BWFC viable?

How does it do that? As has been pointed out, it means the club will be forced into a fire sale to raise money to pay off as much of the debt as possible. And day to day running is put into the hands of an administrator (hence the name...) - so he relinquishes control and sells off stuff he owns, cheaply, in order to pay himself a fraction of what he's owed. I ask again, why? It seems like the least sensible of all his options, for all parties concerned. Doesn't mean he won't do it - unlike most folk on here it seems, I have no insight into his motivations, intentions, etc. But I would say going into administration would be foolish.

With all due respect to everyone's knowledge of the subject, saying there will be a fire sale would only, in my understanding, be true if the club was going to be wound up. Given that we can demonstrate an ongoing ability to generate money, and Eddie Davies company being in a position to dictate the payout to creditors (him being the principle and majority creditor everyone else must comply with what he agrees to) it would be within the administrators remit to not involve themselves with a fire sale. I don't see it as an inevitability.

Is Davies even in a position to convert our debt to equity?

He's the owner and the one who also owns the debt. So yes. Unless he desperately needs £150M for a new solid gold helicopter, or something. In which case, he really shouldn't have signed the agreement that he had to give a ten year notice period to call in the debt.

Again, Eddie Davies per se doesn't own the debt, but Moonshift investments. Again, my understanding is that, given Moonshift are a Limited Company (again if my understanding is correct) of which Eddie Davies is a Director and majority shareholder of, he would be considered to not be acting in the best interests of the company if he simply "wiped the debt off".

As I reiterate, I'm interested in a discussion. Because I suspect that if BWFC is to viable anytime in the future, we need to rid ourselves of the £163m Sword of Damoles hanging over us. I see no painless way of achieving that.

[Prufrock]

The bank loans are apparently nowt to worry about, so ED is in effect our only creditor. Why the feck would you get the club a 10 point penalty to bring in an administrator to sell off everything at rock bottom prices to pay back yourself a fraction of what you are owed when you can not appoint the administrator, not have a ten point penalty, and sell off all the assets at prices you choose (including rock bottom should you so wish) and pay back, at worst, the same per cent age as what you'd owe?!

[Lord Kangana]

Pru, you can and do appoint the administrator of your choosing. On this point I will not concede. You do.

[Lord Kangana]

And you don't have to sell off assets if the majority of your creditors agree to the % payout. ED, as officer of Moonshifts, is our principle creditor.

[Beefheart]

I've just looked at the going concern opinion on the latest accounts which basically says 'if Eddie stops giving us money we have the option of selling assets to meet obligations'.

Not sure where the £15m comes from. The RPT Note says Moonshift Investments charged £6.94m in respect of interest, arrangement and gurantee fees.

It also shows that the movement in debt is due to a £27m injection of Cash, which is not suprising given the fact that wage costs alone exceed revenue. It also states that the rate charged by Moonshift for FY14 will be 0%.

[Prufrock]

But why would you appoint an administrator to do what you can do anyway. ED can already not sell all the assets and wipe out any percentage of the debt he chooses.

On your second point I don't know this, but I'd be astounded if for the purposes of a CVA 'the majority of your creditors' can include companies owned by the same guy who owns the club.

I don't think ED could fix it so the club paid 1p in the pound to all creditors without selling assets as a way to knock 99% off the bank debt which is what I think you mean no?

Otherwise any club could set up a new company. Get that company to lend the club the total debt plus £1. Then do that to wipe out all debts.

[bobo the clown]

We are in danger of violently agreeing with each other.
=======================
The club owes £160m or so.

It is owed, largely, to Eddie Davies.

So he owes it to himself.

There is NO benefit to him collapsing the Company and having to sell his valuable assets (Ground, Hotel, Euxton etc.) at bottom dollar.

No-one can collapse a Company deliberately just to avoid paying debts AND keep the valuable assets. Even if there was some way to do this the only big loser would be Eddie Davies.

[Prufrock]

This is quite civilised I thought!