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

[3points]

Thanks STAR, great decision to engage with the FL over this debacle. Out of interest is there anyone within STAR who has a legal background who could advise if there is anything that business/club shareholders could do to try and compel the owner to put the club into administration rather than just have it carry on limping from one farce to another while the owner seemingly doesn't give a Castlemaine 4X?

I suspect there isn't but just want to know all the obvious options to get things sorted have been/are being explored.

We do have access to expertise thankfully, we are very lucky in that regard.

A decision to go into administration is not one to be taken lightly and is really an option of last resort.

You're likely looking at £3-4m of costs if an administrator would take us on. Debts are predominantly to the owner and HMRC, minority non-footballing creditors would be hugely impacted which has knock on effects into the community.

Subsidiary companies, RFC Bearwood Limited, Reading Women's Football Club and the Reading FC Community Trust would likely default into admin, also.

The only likely route for an administrator to take us on would be through keeping the club afloat via the sale of land at Bearwood (we use approx 10% of the 120 acres).

The owner remains the owner until the administration process is over and it's unlikely to be quick, straightforward and painless, not even considering the points deduction.

Helpful context. Do administrators have the authority to accept offers to buy the club? From what I can see, the biggest barrier to resolving this situation is Dai's asking price. Could administration take the ultimate decision out of his hands?

yes - that is their job. The directors lose their powers to run and control the club.

[3points]

Per the 30 June 2022 (so somewhat out of date) the amount owed by the club to group undertakings (being Renhe Sports Management, the immediate parent company) is £83m as the EFL has forced Dai to convert debt each year into equity. Assuming that number is still broadly correct then the most Dai could get back from an admin is £83m per his secured debt (assuming the charge relates only to that debt) as the equity is worthless. Clearly an administrator won't get £83m, especially as the stadium sits in a totally separate offshore legal entity.

But you have to remember the administrators' obligations are to maximise realisations. Someone interested in buying the club might decide Bearwood is worth paying £30m as a trai9ning ground. But then a property developer might look at it and say it's worth £50m. The administrator will then sell to the property developer to maximise realisations back to the secured creditor (Dai in this case).

[Sutekh]

Per the 30 June 2022 (so somewhat out of date) the amount owed by the club to group undertakings (being Renhe Sports Management, the immediate parent company) is £83m as the EFL has forced Dai to convert debt each year into equity. Assuming that number is still broadly correct then the most Dai could get back from an admin is £83m per his secured debt (assuming the charge relates only to that debt) as the equity is worthless. Clearly an administrator won't get £83m, especially as the stadium sits in a totally separate offshore legal entity.

But you have to remember the administrators' obligations are to maximise realisations. Someone interested in buying the club might decide Bearwood is worth paying £30m as a trai9ning ground. But then a property developer might look at it and say it's worth £50m. The administrator will then sell to the property developer to maximise realisations back to the secured creditor (Dai in this case).

Hoping, that if it comes to administration, the councils involved will make it quite clear that property development is a definite non starter for either site ( or take brown envelopes so large as to make any deal impossible ).

[3points]

Per the 30 June 2022 (so somewhat out of date) the amount owed by the club to group undertakings (being Renhe Sports Management, the immediate parent company) is £83m as the EFL has forced Dai to convert debt each year into equity. Assuming that number is still broadly correct then the most Dai could get back from an admin is £83m per his secured debt (assuming the charge relates only to that debt) as the equity is worthless. Clearly an administrator won't get £83m, especially as the stadium sits in a totally separate offshore legal entity.

But you have to remember the administrators' obligations are to maximise realisations. Someone interested in buying the club might decide Bearwood is worth paying £30m as a trai9ning ground. But then a property developer might look at it and say it's worth £50m. The administrator will then sell to the property developer to maximise realisations back to the secured creditor (Dai in this case).

Hoping, that if it comes to administration, the councils involved will make it quite clear that property development is a definite non starter for either site ( or take brown envelopes so large as to make any deal impossible ).

But that's a risk a property developer takes. Given there are plans for 4,500 houses effectively across the road in the Loddon valley then, with time, I'd expect Wokingham BC to approve at least some level of development on Bearwood at some point. But I'm no planning expert or property agent so may be totally wrong.

[Dirk Gently]

As an aside, it's the Football Creditors' rule (which says that football debts are to be paid off in full, ahead of any other non-secured creditors, that HMRC really objects to.

Their attitude is why should other football clubs be paid in full when the public purse may just get a few pence in the pound - which is why they have a policy of going straight for Winding Up orders when football clubs are late with tax payments. They tend to be more lenient with other industries and will often negotiate or agree payment plans - but not football club.

The other side of the coin is that football runs on credit - without it the professional game would cease to function. Quite apart from transfer fees (usually paid in instalments), the sharing of gate money at cup ties and the selling of away tickets would cease if any club wasn't 100% sure they'd get their money in the end.

Without the Football Creditors' rule, it's highly unlikely MK Dons would have agreed to play us on Saturday. They get 45% of the gate money (and the FA get 10% for the prize fund) - and with us in such a parlous financial state they need to be sure they'll get that cash (and all of it, not just a few p in each £) if we go into administration.

[tmesis]

I wonder if we have any outstanding debts to other clubs.

It's so long since we've paid a transfer fee that even ones paid over a number of years are probably paid off now.

[Hound]

I wonder if we have any outstanding debts to other clubs.

It's so long since we've paid a transfer fee that even ones paid over a number of years are probably paid off now.

Yeah must be youd think. Maybe some ejaria money? Possible loan fees

I think there might be more the other way, Puscas money is installments. Those young lads who moved on as well possibly

[3points]

[quote="tmesis"]I wonder if we have any outstanding debts to other clubs.

It's so long since we've paid a transfer fee that even ones paid over a number of years are probably paid off now.[/quote
Interesting point. Anyone know how many games Ejaria has played since his transfer? Is he not being played because he is close to triggering another appearance based milestone fee?

[Snowflake Royal]

Interesting point. Anyone know how many games Ejaria has played since his transfer? Is he not being played because he is close to triggering another appearance based milestone fee?

He's not being played because he's an unfit waster.

But for the record he's on: 63(9) since his transfer to us.

[Silver Fox]

Earnshaw has tweeted (X'd?) that Dai has paid the tax bill

[Mid Sussex Royal]

Earnshaw has tweeted (X'd?) that Dai has paid the tax bill

Does this mean the latest hearing is cancelled or are we still at risk of points deduction for missing 2 payments?

[Hound]

Interesting

Could be a positive sign in terms of a sale? Maybe overthinking that

[windermereROYAL]

Some people speculating that Dai`s sibling has or is flying in to oversee the sale.

[Stranded]

Apparently Dai's sister is/has flown in to the UK to help with a sale.

[Hound]

Vaguely interesting that seemingly every time something happens ‘club sources confirm’ to multiple journalists. Very leaky nowadays

Wonder who that is

[traff]

I imagine the bill has been paid to avoid the threat of administration, which would affect his ability to set his own price?

[windermereROYAL]

Will the EFL charges against us be dropped now?

[Royalwaster]

Interesting point. Anyone know how many games Ejaria has played since his transfer? Is he not being played because he is close to triggering another appearance based milestone fee?

He's not being played because he's an unfit waster.

But for the record he's on: 63(9) since his transfer to us.

Maybe he has got significant mental health (or other) issues that we're not aware of?

[Millsy]

See, Dai is the right man after all.

[Stranded]

See, Dai is the right man after all.

Looks like he's scared of his sister more than anything.