Embargos, HMRC Payment defaults, non payment of wages, the usual under Dai Wrongge

[PieEater]

Reading Football Club can confirm that a suspended three-point penalty has been activated as a result of owner Mr Dai failing to deposit an amount equating to 125% of the club's monthly wage bill into a designated account by the deadline of Tuesday 12 September 2023, as ordered by the Independent Disciplinary Commission in its decision of 15 August 2023.

I thought the phrasing was interesting - the penalty seems to require personal money from Dai, not the club. It's almost like they are saying that the club could have paid it but the cash had to come from Dai.

Anyway, it's no surprise for me as I fully expected this happen. How a club who are struggling with cash can be expected to pay more than double as a penalty is just a daft penalty.

[Hound]

Found it mildly interesting that there was no attempt to sugar coat it on the official statement either

Or in the pre match interviews with Selles

It’s Dai has screwed up, simple as

[Snowflake Royal]

Reading Football Club can confirm that a suspended three-point penalty has been activated as a result of owner Mr Dai failing to deposit an amount equating to 125% of the club's monthly wage bill into a designated account by the deadline of Tuesday 12 September 2023, as ordered by the Independent Disciplinary Commission in its decision of 15 August 2023.

I thought the phrasing was interesting - the penalty seems to require personal money from Dai, not the club. It's almost like they are saying that the club could have paid it but the cash had to come from Dai.

Anyway, it's no surprise for me as I fully expected this happen. How a club who are struggling with cash can be expected to pay more than double as a penalty is just a daft penalty.

It's not a penalty. Its security and a way of avoiding a penalty (the suspended 3 points).

We've only failed in paying our Championship level wage bill, not L1.

[Clyde1998]

There was a post on Twitter someone linked me to suggesting £400k of our wages last month came from the Category 1 Premier League money and the rest was covered through a loan from Select Car Leasing. Also the tax bill for this month is unlikely to be paid apparently.

[Hound]

There was a post on Twitter someone linked me to suggesting £400k of our wages last month came from the Category 1 Premier League money and the rest was covered through a loan from Select Car Leasing. Also the tax bill for this month is unlikely to be paid apparently.

SCL have certainly been mentioned a few times

Zero surprise on the tax

[Darlo Royal]

If SCL have indeed been providing financial support over and above their sponsorship fees, why aren’t their PR department shouting it from the rooftops?

[Hound]

If SCL have indeed been providing financial support over and above their sponsorship fees, why aren’t their PR department shouting it from the rooftops?

Coz they probably know people will laugh at them for throwing money down the drain

[Sutekh]

There was a post on Twitter someone linked me to suggesting £400k of our wages last month came from the Category 1 Premier League money and the rest was covered through a loan from Select Car Leasing. Also the tax bill for this month is unlikely to be paid apparently.

SCL have certainly been mentioned a few times

Zero surprise on the tax

When will it end?

[Mr Angry]

For oxf*rd sake.

That is all.

[andrew1957]

Does anyone understand company law enough to know how this might end. Normally a business owner would realise that a business was failing and place it into administration. But what happens if a mad owner decides to simply stop paying the bills but also refuses to go into administration. Presumably at that point creditors would seek liquidation. But in this case there is a good chance Reading FC could be sold as a viable business and so can the liquidators seek a buyer or do they simply have to sell assets and fold the club? In other words is there any way Dai can be removed as owner before he kills a viable club?

Any ideas?

[Lower West]

But what happens if a mad owner decides to simply stop paying the bills but also refuses to go into administration.

The club will rapidly implode. The HMRC isn't going to hang around.

[Mid Sussex Royal]

But what happens if a mad owner decides to simply stop paying the bills but also refuses to go into administration.

The club will rapidly implode. The HMRC isn't going to hang around.

Well they have with Southend, for months

[PieEater]

Although this sanction came this season it was based on contraventions last season, you have to wonder about the "integrity of the league" if we're hit with two sanctions unrelated to the current league we're in.

[windermereROYAL]

It`s looking very grim with Dai determined to get his hat-trick of clubs he sends to the wall. we need another sir John.

[windermereROYAL]

Why would SCL loan us money with no certainty of getting it back?

[Greatwesternline]

Does anyone understand company law enough to know how this might end. Normally a business owner would realise that a business was failing and place it into administration. But what happens if a mad owner decides to simply stop paying the bills but also refuses to go into administration. Presumably at that point creditors would seek liquidation. But in this case there is a good chance Reading FC could be sold as a viable business and so can the liquidators seek a buyer or do they simply have to sell assets and fold the club? In other words is there any way Dai can be removed as owner before he kills a viable club?

Any ideas?

Normally an owner puts company in administration because the company can't meet its debts as and when they fall due, it's also a criminal offence to trade while knowingly insolvent.

In Reading's case until very recently we could pay our debts as and when they fell due, which are basically players wages and tax on those wages.

Our situation is not like a normal company because nearly all the debt is to the owner. Dai won't gain anything from putting his own debts into administration because he loses control of the club and wipes out his own debt which to him is an asset.

Most likely scenario if Dai has decided no more of his money is going in is that players don't get paid and then HMRC don't get paid. HMRC won't hang around this is true. They will wind up club swiftly, or at least initiate the process which is to petition for our insolvency.

But in reality what normally happens is rather than lose the entire club for nothing a football owner sells to someone else before that happens and the new owner pays off HMRC to keep company afloat.

HMRC would keep the club afloat if they thought they'd get better return on their debt through sale of the business to new owners than in winding up.

But from the summer HMrC went straight for winding up petition which indicates that is their preferred strategy.

[Jagermesiter1871]

Why don't SCL just buy the club ffs?

[Farnham Royal]

Because they are a medium sized car leasing company and don’t want to throw money away on a football club.

[Moonfish]

In the EFL ruling for the recent 1pt deduction (3pts suspended) the club were clearly arguing Dai had the money, it was purely a cashflow/timing issue in getting it out of China. The events of this last week have clearly shown that not to be entirely accurate:

- We had a month to get the 125% of wages into an account with the EFL to avoid the 3pts suspended. This should have been plenty of time, yet we still failed to meet this requirement. There's no way we'd risk a 3pt deduction if the money was available and there was a way of getting it out of China in time, therefore I can only conclude the cash isn't there (or it is and the problems are deeper)
- Rumours are that we've borrowed the cash to pay our last wage bill from SCL. Why would we need to do this, as pointed out by others our outgoings (predominantly wages) are incredibly predictable, and if the cash was there in China why wouldn't we just draw it down earlier each month or get one lump sum payment over to cover say the next 3months wages so that we don't have this issue every month?
- If Dai had the cash why is it being strongly rumoured that we are about to late pay HMRC for the fourth time? Anyone in business knows the first person you make sure you pay each month is the tax man, this is inexcusable.
- Lastly, where is our Bank in all of this? If a Business had genuine timing/cashflow issues but the money was there, they'd simply approach their bank for some form of working capital or revolving credit facility. The fact we've not been able to do this, and instead have potentially turned to SCL last month and are looking for an external investor to provide liquidity, is by far the biggest red flag to me in all of this as it signals that our troubles run far deeper than it just being difficult to get money out of China. Why won't our bank (Bank of China?) step in to provide the short term finance? Do they know more about Dai's financial issues in China and its put them off, are they simply maxed out on exposure to RFC, or perhaps the non-payment of Tax has triggered an event of default on our existing debt? There is something they clearly don't like and that should genuinely concern us all.

[Snowflake Royal]

This may come as a shock to some but Dai, through the club, is not being honest about what is happening.