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Loans/ Debt to the owners

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Hep said:
I agree, but a director's loan can be left indefinitely. It could be a 0% loan with no end date.

Very common practice.
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Illegal to have a 0% loan unless money is paid back 9 months before the end of the accountancy tax period
What usually happens is the loan is "paid back" and then taken out again to avoid interest and tax implications
 

Guinness Guzzler said:
That sounds fair enough then. So basically if he does it and doesn't factor it into a selling price then it's okay, but if he does factor it in then he's basically trying to get the parachute money back again?
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Of course that’s what they will do .It’s business to them .it’s only us who sees it emotionally.

They didn’t come here for anything else bar to make money long term .
 
Clavas said:
Illegal to have a 0% loan unless money is paid back 9 months before the end of the accountancy tax period
What usually happens is the loan is "paid back" and then taken out again to avoid interest and tax implications
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Correct, but in effect, can be indefinite. I thought the 9 months was for money lent to a director, not from a director???
 
Why sack Durban said:
we will need GOM on this one
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It's possible money has come in as loans; the alternative is that it has been gifted (there are precedents for this). Given the sources of the money, I find the idea of gifts, shall we say, improbable.

Should it emerge that Chris is right on this as seems the more likely scenario, then pressure needs to be exerted by RAWA and others for this debt to be capitalised, that is, turned into share capital. It would then be possible only for cash to be recovered by way of a higher sale price for shares down the line.
 
Confucius said:
I’ve no doubt he will be looking at a club, I just couldn’t see it ever being us.
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Looked a while back
Grumpy Old Man said:
It's possible money has come in as loans; the alternative is that it has been gifted (there are precedents for this). Given the sources of the money, I find the idea of gifts, shall we say, improbable.

Should it emerge that Chris is right on this as seems the more likely scenario, then pressure needs to be exerted by RAWA and others for this debt to be capitalised, that is, turned into share capital. It would then be possible only for cash to be recovered by way of a higher sale price for shares down the line.
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Is the correct answer.
 
Gillythedilf said:
Of course that’s what they will do .It’s business to them .it’s only us who sees it emotionally.

They didn’t come here for anything else bar to make money long term .
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Making money is fine, but buying the club using parachute money, saying you'll pay it back, doing it in a way which creates a loan and then getting the money when you sell isn't just business, it sounds absolutely wrong (I'll not say criminal because I know there isn't technically a debt to repay and I don't fancy a letter from Donald's lawyers!)
 
What is the reasoning for doing it? Does it benefit the club or does it benefit the owners personally?
 
Guinness Guzzler said:
Making money is fine, but buying the club using parachute money, saying you'll pay it back, doing it in a way which creates a loan and then getting the money when you sell isn't just business, it sounds absolutely wrong (I'll not say criminal because I know there isn't technically a debt to repay and I don't fancy a letter from Donald's lawyers!)
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It does sound totally wrong I agree,just don’t be surprised if it has happened I’d say .

They should have said ES sold the club to them for £20m less than what they put out there rather than act the big lads.It’s bit them on the arse.
 
Hep said:
I'm not defending the owners, I'm explaining how a very common accounting practice shouldn't be the next thing some of the fans get riled up about.

I asked the question, why is it a problem. No answers yet....
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Well the club wouldn’t be debt free anymore
 
jsdftm04 said:
Didnt SD take some money, I wanna say £10m out of the club into another company at one point? Or did I imagine that @Grumpy Old Man
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The deal with Short committed the club to pay the final £25m of the loan from the parachute. Because the deal seems to have been appallingly drafted (the original idea of that £25m going straight to Short from the PL actually breached its regulations), the money ended up passing through Madrox on its way to Drumaville, creating an accounting shambles (to put it mildly). The whole handling of the SBC loan repayment was a dog's breakfast from start to finish.
 
Gillythedilf said:
It does sound totally wrong I agree,just don’t be surprised if it has happened I’d say .

They should have said ES sold the club to them for £20m less than what they put out there rather than act the big lads.It’s bit them on the arse.
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My worry is, if they really intended to pay it back, why write it off in the first place? They could have kept the debt there, paid it off and all would be well (as far as I can tell with my limited at best knowledge of finances). Instead they've written it off, so when they pay it back there's a possibility that they get it back again when they sell. Doesn't sound right to me and no, I wouldn't be at all surprised if that's what's happened.

The question then becomes what did KLD pay for 41%? Did he pay based on £37m (which the value would be, roughly, if the parachute money was paid back) or on £12m (the value if, ultimately, it wasn't). If the former then I'd imagine he'd be pretty pissed off. But again that's for cleverer lads to understand, I don't know if it makes any sense at all!
 
Guinness Guzzler said:
Making money is fine, but buying the club using parachute money, saying you'll pay it back, doing it in a way which creates a loan and then getting the money when you sell isn't just business, it sounds absolutely wrong (I'll not say criminal because I know there isn't technically a debt to repay and I don't fancy a letter from Donald's lawyers!)
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Legally fine; ethically more than questionable.
 
Grumpy Old Man said:
The deal with Short committed the club to pay the final £25m of the loan from the parachute. Because the deal seems to have been appallingly drafted (the original idea of that £25m going straight to Short from the PL actually breached its regulations), the money ended up passing through Madrox on its way to Drumaville, creating an accounting shambles (to put it mildly). The whole handling of the SBC loan repayment was a dog's breakfast from start to finish.
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Cheers, I knew there was something.
 
Guinness Guzzler said:
My worry is, if they really intended to pay it back, why write it off in the first place? They could have kept the debt there, paid it off and all would be well (as far as I can tell with my limited at best knowledge of finances). Instead they've written it off, so when they pay it back there's a possibility that they get it back again when they sell. Doesn't sound right to me and no, I wouldn't be at all surprised if that's what's happened.

The question then becomes what did KLD pay for 41%? Did he pay based on £37m (which the value would be, roughly, if the parachute money was paid back) or on £12m (the value if, ultimately, it wasn't). If the former then I'd imagine he'd be pretty pissed off. But again that's for cleverer lads to understand, I don't know if it makes any sense at all!
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Tax benefits
 
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