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Derby County deal expected to collapse

stapler said:
HMRC will not have a choice other than to let go of the debts owed to it in exchange for pennies in the pound. That's what happens to companies in administration.*

Their assets - including their businesses and subsidiaries - are sold free of the company's debts** and the creditors have to make do with a pro-rata distribution from what is left.

* There are avenues out of administration that don't involve creditors taking a haircut but they are rare.
** Unless the buyer voluntarily agrees to take on the debt. This sometimes happens with trade creditors, because it helps with and is sometimes vital for the continuation of the business. I have never heard of anybody voluntarily taking on tax debts.

No they won't. They will have to pay any debts that they are required to pay under league rules in order to maintain their place in the league* + a sum the administrator is willing to accept for the business.

The administrator does not have to wait for a bid that clears all the debts. The bid just had to be better for the creditors than a liquidation.

* Legally there is no requirement to do this, but the business is worth far more with a league place than without one so it would probably be mad not to.
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Nope. They're now preferential creditors again, and are first in the queue for distribution, The only way they lose out is if the sale price doesn't cover the amount they're owed.
 

kildaremackem said:
do they outrank football creditors now?
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They outrank everyone. Football creditors are only preferred by a PL/EFL rule, and not in law. Legally, football creditors are unsecured creditors, it's simply that the new owners have to make up any shortfall - they don't get any more from the insolvency distribution than any other creditors.
 
Grumpy Old Man said:
They outrank everyone. Football creditors are only preferred by a PL/EFL rule, and not in law. Legally, football creditors are unsecured creditors, it's simply that the new owners have to make up any shortfall - they don't get any more from the insolvency distribution than any other creditors.
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so to comply with the law..any new owner has to make whole HMRC at 100pc of debt and then all football creditors at 100pc of debt before negotiaring with any other creditor?
Ouch!
 
kildaremackem said:
so to comply with the law..any new owner has to make whole HMRC at 100pc of debt and then all football creditors at 100pc of debt before negotiaring with any other creditor?
Ouch!
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No - there's normally enough to pay HMRC. Even if not , there's no comeback on the new owners. By PL/EFL rule, the new owners must ensure that football creditors receive 100%, and other unsecured creditors 35% of the amount due, topping up any shortfall from the administration proceeds. Failure to do this will incur a 9 point deduction.
 
With the fixtures being released this morning, I can see the EFL stepping in again and putting more pressure on to get this sorted quickly. It's surely getting to the point where the sporting integrity of L1 next season will be questioned.
 
Grumpy Old Man said:
Nope. They're now preferential creditors again, and are first in the queue for distribution, The only way they lose out is if the sale price doesn't cover the amount they're owed.
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Bloody well right.
Grumpy Old Man said:
They outrank everyone. Football creditors are only preferred by a PL/EFL rule, and not in law. Legally, football creditors are unsecured creditors, it's simply that the new owners have to make up any shortfall - they don't get any more from the insolvency distribution than any other creditors.
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Should be:
1/ HMRC.
2/ Non football creditors.
3/ Football creditors.

Maybe then the game would put in measures to police itself.
 
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Grumpy Old Man said:
They outrank everyone. Football creditors are only preferred by a PL/EFL rule, and not in law. Legally, football creditors are unsecured creditors, it's simply that the new owners have to make up any shortfall - they don't get any more from the insolvency distribution than any other creditors.
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so this is what i dont understand (and its me not understabding-not me arguing) what if there is enough to pay 100pc to HMRC but not enough to pay the football creditors 1100pc? what happens? the business surives but....?
 
kildaremackem said:
so this is what i dont understand (and its me not understabding-not me arguing) what if there is enough to pay 100pc to HMRC but not enough to pay the football creditors 1100pc? what happens? the business surives but....?
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Buyers have to pay the football creditors 100% and other unsecured creditors 35%.
 
kildaremackem said:
ok..? so the aummption is the club has the cash for HMRC and the buyers then pay the creidtors?
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HMRC are paid from the proceeds of the administration, If that doesn't cover what they're owed, they lose out. Anything left goes to secured creditors, they lose out, In a normal insolvency, most of the time unsecured creditors get nothing. It's only the League rules that guarantee them payment from the new owners.
 
Comparing our sale to that of Derby or anyone else for that matter is for the birds. Look at the fiasco from Day 1, does anybody really know what we were purchased for?
 
Pepe said:
Comparing our sale to that of Derby or anyone else for that matter is for the birds. Look at the fiasco from Day 1, does anybody really know what we were purchased for?
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indeed it was horribly communicated and changed..the purchase agreement origianlly said £15m..then because of someting, either alvarez related or someting else..it was negotiated down to £12.7m...but donald being an idiot with a desire to sound big time started about £40m..
 
Well they play Oxford in just over a month. Got to get a sale through soon as surely they don't have the finances to see through the season? Don't know how comparable this is to the Bolton situation having to play kids before being bought out.
 
Grumpy Old Man said:
Nope. They're now preferential creditors again, and are first in the queue for distribution, The only way they lose out is if the sale price doesn't cover the amount they're owed.
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Not quite. HMRC's status as secondary preferential creditors applies only to VAT, payroll deductions and CIS deductions. They remain unsecured in respect of the rest. I don't know the breakdown of Derby's debts. In the absence of profits (ha!) I'd expect the preferential debts to make up the bulk, although non-preferential debts such as employer's NI, penalties and surcharges may be a significant component.

But the point I was making was that HMRC has no choice about what the administrator does. They can't block a sale on the grounds that their debts won't get paid in full.
 
PJH said:
Well they play Oxford in just over a month. Got to get a sale through soon as surely they don't have the finances to see through the season? Don't know how comparable this is to the Bolton situation having to play kids before being bought out.
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From what I gather although Bolton were in administration they could meet the day to day running costs until a buyer was found and didn't owe anywhere near as much to the HMRC. Derby like Rangers previously owe a lot more and when it gets to a certain amount the HMRC are going in for the kill to deter other clubs
 
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