The Debt.

[Lord Kangana]

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.

It gets very complicated when one person owes two companies in this situation. Interestingly, having been in that position, what the administrators do is to act on behalf of one company to get money from the other. Considering that ED (fingers doubly crossed) is acting in the best (perhaps read "least worst") interests of BWFC, if he could demonstrate an ability to pay a p/£, and simultaneously the ability to serve the best interests of BWFC on an ongoing basis, then an offer of p/£ to Moonshift would have to considered by....drum roll please... Ed at Moonshift.

I think what people are getting confused with here is liquidation, which is not administration. In administration, one of the administrators principle targets is to see whether the company can continue (the rules are slanted in favour of business being allowed to conduct business). So, in my experience - and again, context is everything, I'm not sure what dim view HMRC and Companies House would take of these shenanigans. Although, again, my experience is that they have far less power than people might imagine. So, morally and legally it could be dubious, but as to whether we risk censure for doing it? I'm not sure in any practical sense we might.

[jaffka]

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.

I think that I have read this some where else, it made perfect sense then.

Why is this matter still being discussed when we haven't even tried to sell everything?

[Prufrock]

But to what end, to wipe out the bank debt? I can't think what else you can mean.

As I said above though, all well and good in theory but there must be rules against it where both companies are owned by the same people or every company with debts would do as I suggested.

Imagine you own a company A with debts of 100k, to actual creditors, not yourself. You set up another company (B). B loans A 150k and is now the majority of the creditors. You appoint an administrator and persuade him that it's best for A not to sell all the assets but for the creditors to accept 1p in the £. Said offer is put to company B (you) and accepted. You now have to pay 2.5k, 1.5k of which is to yourself.

If that were legal it would be happening constantly. I don't know the precise way it's not (is it fraud, is 'creditor' defined to exclude companies owned by the same person etc.) but I'm fairly sure it is somehow.

[Lord Kangana]

Having seen behind the veil, I'm (along with my friend who is an accountant) constantly amazed at what you can get away with. And, in our experience of the research we did (which can't be all-encompassing, there are 100's of 1000's of companies in this country) various nefarious activities go on all the time. Much, much more than you would think credible.

What I bring to the party is admittedly not all encompassing, but I would challenge anyone who thinks this is straightforward black and white. Its a highly unregulated area. Lip service regulation, yes, practical regulation? No. Absolutely not.

And the purpose I would see would be to free BWFC from debt, and ED from responsibility.

[Lord Kangana]

This doesn't, by the wya, mean I think they will or should do this. I'm merely challenging the idea that they can't. The more I think about it, the more I feel they could. Albeit in a complicated and disruptive manner.

[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.

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.

So Eddie in effect can't just put BL into administration to recoup 15p in the pound for Moonshift Investments?

So in effect he'd lose everything he's invested were he to send BL into administration?

[Puskas]

This doesn't, by the wya, mean I think they will or should do this. I'm merely challenging the idea that they can't. The more I think about it, the more I feel they could. Albeit in a complicated and disruptive manner.

I don't think anyone's saying they can't. More that it would be a stupid thing to do.

Your argument that they will seems to rest on several assumptions:
1) Eddie Davies doesn't control enough of Moonshift to convert the debt to equity, but does control enough to convince them to take a minimal repayment (possible, assuming he's convinced them that otherwise they'll get nothing).
2) That Moonshift want to claim the money back now. This is now impossible, since they have an agreement with Burnden Leisure that they must give a ten year notice period before calling in the debt.
3) That we can raise x-million (call it £16million, based on 10p in the pound, for the sake of argument) quickly enough to pay off 10% of the debt when we go into administration. And also pay off all footballing creditors in full (wages, etc). Where would we get this from? Eddie Davies? Doesn't it seem to be circular...?

Fundamentally, I think point (2) is the main reason why it won't happen now - perhaps in nine-and-a-bit years, when we need to pay them off, and have no other options....

[Lord Kangana]

Players are employees. They have first dibs on payment. But given the company turns over £millions per month, that really isn't an issue. I don't believe the football first exists anymore. The taxman is an equal creditor in the eyes of the law with everyone else (the paper seller, pie supplier). If we're truly altruistic, we could manipulate this scenario by making our payments to everyone are ultra up-to-date, thereby having few outstanding creditors beyond ED.

[bobo the clown]

There will be some ultra highly paid city wizz-kids in Bankrupcy and Administration who wil doubtless have some perverse view on this but, in general what I saw is correct for most cases. You certainly can't move bad money into a good account and then fold. That'd simply be fraud .... and this is hardly small fry, nor out of the public eye.

ED seems to have structured a 10 yr pay back at % 0 interest and says he's unconcerned. I suspect he is but we should be very grateful. We all skirt around the elephant in the room ... he's not a young guy and what happens if he croaks ? The 10 yr structuring should give us some comfort .... though that £16m pa is still going to be hard to find.

Frankly I'm happy to stop panicking on the debt, take it seriously of course, but not panic ..... I'm leaving the panicking for the football.

[Lord Kangana]

This doesn't, by the wya, mean I think they will or should do this. I'm merely challenging the idea that they can't. The more I think about it, the more I feel they could. Albeit in a complicated and disruptive manner.

I don't think anyone's saying they can't. More that it would be a stupid thing to do.

Your argument that they will seems to rest on several assumptions:
1) Eddie Davies doesn't control enough of Moonshift to convert the debt to equity, but does control enough to convince them to take a minimal repayment (possible, assuming he's convinced them that otherwise they'll get nothing). No, its that as principle officer of Moonshift, the law would take a dim view of him voluntarily acting against its best interests.
2) That Moonshift want to claim the money back now. This is now impossible, since they have an agreement with Burnden Leisure that they must give a ten year notice period before calling in the debt. Again, you my have misread. Its perfectly plausible to come up with a repayment timeframe
3) That we can raise x-million (call it £16million, based on 10p in the pound, for the sake of argument) quickly enough to pay off 10% of the debt when we go into administration. And also pay off all footballing creditors in full (wages, etc). Where would we get this from? Eddie Davies? Doesn't it seem to be circular...? We would only have to do that in liquidation. We're discussing administration. We have an ongoing ability to meet all but our major creditors obligations.

Fundamentally, I think point (2) is the main reason why it won't happen now - perhaps in nine-and-a-bit years, when we need to pay them off, and have no other options....

[Prufrock]

I still don't get what you think would be the point.

In terms of who we actually owe money to there appears to be ED (through Moonshift) and some small (relatively) bank loans.

Do you disagree with any of that, and if not, what do you think would be the benefit of going into administration that couldn't be acheived by Moonshift (Ed) just writing off that loan?

All I can think of is we'd get rid of the bank loan. I'm pretty sure it doesn't work like that. I had a quick glance at the schedules to the Enterprise Act which seem to govern the relevant duties of an administrator. I'm only looking quickly bit I think para 74 means the banks could stop the administrator letting Ed do that.

[Lord Kangana]

As I say, ED as a Director is legally bound to act in the best interests of the companies he is director of. He can't simply write the debt off in that sense.

[bobo the clown]

As I say, ED as a Director is legally bound to act in the best interests of the companies he is director of. He can't simply write the debt off in that sense.

Exactly.

[jaffka]

As I say, ED as a Director is legally bound to act in the best interests of the companies he is director of. He can't simply write the debt off in that sense.

Exactly.

You are being very patient

[Prufrock]

So he can't write it off but he can take 1p in the £?! Is that what you're saying?!

And again, why?! He owes it to himself! And he could still buy 160m worth of BWFC shares from himself and why?!

What is he getting?

Do you mean getting rid of the bank loan because I can't see any other advantage?

As an aside, does anyone know if the bank loan(s), are secured or not?

[bobo the clown]

As I said above, we are in great danger of violently agreeing with each other.

[Puskas]

1) Eddie Davies doesn't control enough of Moonshift to convert the debt to equity, but does control enough to convince them to take a minimal repayment (possible, assuming he's convinced them that otherwise they'll get nothing). No, its that as principle officer of Moonshift, the law would take a dim view of him voluntarily acting against its best interests.

Ah, apologies - I misunderstood what you were getting at here.

So your contention is that, since Eddie Davies is legally obliged to act in the best interest of the company he is a director of, he would be failing to act in its best interest (and hence breaking company law) by converting the debt to equity (not writing the debt off by the way - it would mean Moonshift Investments took ownership of Burnden Leisure). However, he would be acting in its best interest if he wrote off 90% of the debt by forcing Burnden Leisure into administration?
I don't claim to be an expert on what constitutes the best interest of private limited companies based in Bermuda, however I don't think it's quite as clear as you claim...

[Lord Kangana]

So he can't write it off but he can take 1p in the £?! Is that what you're saying?!

And again, why?! He owes it to himself! And he could still buy 160m worth of BWFC shares from himself and why?!

What is he getting?

Do you mean getting rid of the bank loan because I can't see any other advantage?

As an aside, does anyone know if the bank loan(s), are secured or not?

He is the director of two seperate organisations Pru. I need you to engage the "what the f*ck? The law lets you do that kind of shit?" part of your brain. Lord knows when I sat in on administration meetings I needed it in spades.

So, as the director of Moonshift, he cannot simply say "I've woken up this morning and decided to give Burnden Leisure a break and accept 10p/£ on the debts they owe me". That would be acting against the best interests of his directorship of Moonshift.

Meanwhile, over at BWFC, Eddie Davies, as sole share holder and director of Burnden Leisure decides to put the company into temporary and voluntary administration. He is "advised" that he should make an offer of 10p/£ to Moonshift.

So, over at Moonshift Towers, Eddie Davies, as director of Moonshift receives the letter from the administrators of Burnden Leisure, who say we'd like to make on offer on behalf of Eddie Davies, director of Burnden Leisure, of 10p/£ to settle your debt. The caveat being if you don't, you may receive less. So ED, director of Moonshift considers this very carefully, being a very responsible company man. And then accepts it, fulfilling his obligations to Moonshift.

I can feel your incredulity. I had it once, too.

[Lord Kangana]

1) Eddie Davies doesn't control enough of Moonshift to convert the debt to equity, but does control enough to convince them to take a minimal repayment (possible, assuming he's convinced them that otherwise they'll get nothing). No, its that as principle officer of Moonshift, the law would take a dim view of him voluntarily acting against its best interests.

Ah, apologies - I misunderstood what you were getting at here.

So your contention is that, since Eddie Davies is legally obliged to act in the best interest of the company he is a director of, he would be failing to act in its best interest (and hence breaking company law) by converting the debt to equity (not writing the debt off by the way - it would mean Moonshift Investments took ownership of Burnden Leisure). However, he would be acting in its best interest if he wrote off 90% of the debt by forcing Burnden Leisure into administration?
I don't claim to be an expert on what constitutes the best interest of private limited companies based in Bermuda, however I don't think it's quite as clear as you claim...

We're about 95% in accord here. So yes, yes, and yes.

What I'm getting at is that he is director of two seperate companies. He has to act in the best interests of each, which are mutually exclusive. Bear in mind that limited companies are sperate entities, they do not "belong" to anyone. And they are not intertwined in the sense that you're getting at.

So if he plunges one into administration, he has to act (completely separately) in the best interests of the other by mitigating the loss. I have no definitive answer as to whether they will do this, nor the exact legality of it, but I have seen similar (not the same!) done.

[Harry Genshaw]

It's all academic anyway. Once Ngog shows his true worth to Swansea, they'll buy him and all our worries will be over