by Greatwesternline »
15 Sep 2023 22:33
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?
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.