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Topic ClosedAmpthill Ambulance Access thread...was Leeds

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Sid James View Drop Down
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Direct Link To This Post Posted: 03 Jun 2019 at 22:45
Originally posted by Pappashanga Pappashanga wrote:


The CVA is a form of composition, similar to the personal IVA (individual
voluntary arrangement), where an insolvency procedure allows a company
with debt problems or that is insolvent to reach a voluntary agreement
with its business creditors regarding repayment of all, or part of its
corporate debts over an agreed period-government websore. If a company can pay all its debts it doesn't need a CVA. It usually means paying a small part of them


But Pappashanga, surely anyone has a chance of pulling through?

Edited by Sid James - 03 Jun 2019 at 22:48
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Dad View Drop Down
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Direct Link To This Post Posted: 03 Jun 2019 at 23:15
Would it be possible to have a CVA where the Rugby creditors were paid and not the others ? - that would comply with RFU rules
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Camquin View Drop Down
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Direct Link To This Post Posted: 04 Jun 2019 at 00:33
Just because they have not formally entered Administration, does not mean an insolvency event has not occurred.
You can only apply for a CVA, if you are insolvent.

And the definition in Regulation 1 is quite broad. It certainly covers taking out a CVA and may well have been triggered by the negotiations with players. The Regulations are pretty strict about rugby debts.

The fact that the RFU sent Melville to Leeds last month means they were aware.

The RFU can apply the points deduction to the previous season, and if the event occurs before the next seasons fixtures are publish - then the presumption is that it will.

Yes there is the six week rule. 
Even if you allow that there has not been an insolvency event until they appoint an insolvency practitioner to commence the CVA procedure, that takes a minimum of two weeks to arrange and usually more. And then time to pay off the debt. with ongoing payments from future revenue. 

So I am not sure it would apply. Unless someone comes in and buys the club.

Re Dad's question, I believe the CVA is usually paid pro-rata. I am not sure you can favour one creditor over another - but I am not an IP. 

But all this is moot. 

If they cannot arrange a CVA they will be wound up.
And they will only get a CVA if they have a viable business going forward.
And they are only viable if they are not relegated and the RFU continues to support them.

Sadly it shows how deep your pockets need to be to chase the dream of Premiership Rugby. They probably need to be even deeper if you make it.

Unless of course you can build a self sustaining brand by attracting 2-3,000 people each week.
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Direct Link To This Post Posted: 04 Jun 2019 at 07:28
I suppose there must be a difference between the RFU's regulations and company law as regards these definitions.

There is no doubt that the club is technically insolvent based on its last filed accounts for 2017. The 2018 accounts are late but the position will doubtless be worse, hence the current discussions.

Being technically insolvent is, however, hardly uncommon among professional rugby clubs. Bedford, for example, had a deficit on its balance sheet at 30 June 2018 of around £1 million. This was supported essentially by loans from its directors. Any company in that position is potentially at risk if those backers change their mind, whether through choice or necessity. And before anyone piles in, I'm not saying this is likely at Bedford, I just offer it as an example.
That's easy for you to say.
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Direct Link To This Post Posted: 04 Jun 2019 at 08:33
Albert.

I would suggest you remove your last posting before the lawyers descend on you. Insolvency (technical or otherwise), is not trading at a loss, nor is it having a debt on your balance sheet. Simply, it is failing to pay those debts when required.
As far as I am aware this did not happen to Bedford.
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Direct Link To This Post Posted: 04 Jun 2019 at 09:02
Yes - a company is not insolvent if the directors / shareholders are willing to fund the losses being made. If they were no start-up would ever succeed and every comapny trades at a loss initially
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Direct Link To This Post Posted: 04 Jun 2019 at 09:42
Originally posted by OldNick OldNick wrote:

Albert.

I would suggest you remove your last posting before the lawyers descend on you. Insolvency (technical or otherwise), is not trading at a loss, nor is it having a debt on your balance sheet. Simply, it is failing to pay those debts when required.
As far as I am aware this did not happen to Bedford.


According to a certain Cov vulture, er, poster, it IS. I think you'll know who I mean... ;)
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Albert Fishwick View Drop Down
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Direct Link To This Post Posted: 04 Jun 2019 at 09:59
As I said, it was only an example. Having an "overdrawn" balance sheet was being technically insolvent when I learnt and then practised accountancy, but that was a while ago now. Clearly, as long as there are folk prepared to advance cash when internal resources are insufficient to meet outgoings then the directors can take comfort from that and continue to believe that going concern is appropriate.

What the Leeds episode has shown is that where the directors are mainly not part of the group of financial backers their fiduciary duty becomes that much harder as they are relying upon assurances from a disparate bunch of third parties, though I am sure they carry out such due diligence as they can on those backers.

Edited by Albert Fishwick - 04 Jun 2019 at 10:00
That's easy for you to say.
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Direct Link To This Post Posted: 04 Jun 2019 at 10:36
Isn't trading while insolvent illegal? You definitely can't prefer one lot of creditors over another unless they are by definition 'preferential' i.e. our chums HMRC.
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Direct Link To This Post Posted: 04 Jun 2019 at 10:58
Originally posted by Pappashanga Pappashanga wrote:

Isn't trading while insolvent illegal? You definitely can't prefer one lot of creditors over another unless they are by definition 'preferential' i.e. our chums HMRC.

I think you can do it but any further losses and liability for them transfer to the directors who authorised it who then may be charged in a court of law. I'm no solicitor but it seems it's a very difficult thing to do legally. 
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Direct Link To This Post Posted: 04 Jun 2019 at 11:02
Internet: Trading whilst insolvent is a legal term referring to a business continuing to trade, despite being insolvent. ... Directors have a legal responsibility to keep losses to creditors at a minimum and as such, if directors knowingly trading whilst insolvent, they could incur personal liability for company debts.
Very risky for Directors.
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Direct Link To This Post Posted: 04 Jun 2019 at 11:18
If the directors know the company to be insolvent but have reasonable grounds for believing that by continuing to trade they can improve the position for creditors, they’re ok.
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Direct Link To This Post Posted: 04 Jun 2019 at 12:28
Originally posted by The Joy of (Level) 7 The Joy of (Level) 7 wrote:

If the directors know the company to be insolvent but have reasonable grounds for believing that by continuing to trade they can improve the position for creditors, they’re ok.
 
Hence the going concern notes from auditors and directors in annual accounts. The note in Tykes accounts was interesting - no support offered to Carnegie yet.
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Direct Link To This Post Posted: 04 Jun 2019 at 12:58
In this case and in my opinion, the pragmatic approach would be to take the hit and seek insolvency protection, subject to Tykes not being willing to underpin the budget deficit.
 
Recent events in rugby have demonstrated that running a club at this level is not a bed of roses but it may also give the RFU/PRL an opportunity to promote their ring-fenced league with 13.465 teams.
 
Only the Directors can know the full position but in my experience its best to accept your fate gracefully - you then sleep at night.
 
Many illustrious clubs have done this - I'm sure we know the names of clubs who have teetered at the edge, some of whom have fallen over.
 
What Carnegie may not have is the inconvenience of a Mini/Youth set up but instead have:
 
"The Affiliate Scheme was created to provide opportunities for Community Clubs across Yorkshire to engage with Yorkshire Carnegie and for them to receive additional support for their club development."
 
I suspect there is also a wider issue about Yorkshire / Northern rugby and the banner possibly being left to Doncaster ..........
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Camquin View Drop Down
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Direct Link To This Post Posted: 04 Jun 2019 at 13:27
Nothing wrong with Doncaster.
A great advert for the leagues Yorkshire 2 -> Championship.
They have had even more promotions than Exeter.
I hope that does not jinx them.

And I always got on well with Ben Hunter.
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Direct Link To This Post Posted: 04 Jun 2019 at 13:53
I don’t think Leeds have behaved well. Teetering on the brink of relegation before Christmas they brought in a bevy of players they couldn’t afford. Their play improved but now their chickens have come home to roost.
I regret I have no sympathy for those that ‘run’ the place, only their bewildered fans.
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Direct Link To This Post Posted: 04 Jun 2019 at 14:39
The end of Leeds has been a catalogue of errors.The name change a disaster .Staying at Headingley with minimal crowds. Trying to act like a big Club without substance . The model was just not sustainable in any way shape or form.Whatever happens is a downward spiral .
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Direct Link To This Post Posted: 04 Jun 2019 at 15:27
Originally posted by Camquin Camquin wrote:

Nothing wrong with Doncaster.
A great advert for the leagues Yorkshire 2 -> Championship.
They have had even more promotions than Exeter.
I hope that does not jinx them.

And I always got on well with Ben Hunter.

Absolutely - it is a great tale, fantastic ground, fantastic club, quite a few promotions (I hope no jinx but we did drop once and bounced straight back up with a bit of a fight). 

And Ben is a good egg. 

And Donny were prepared to state that promotion to the Prem was not going to happen, the year after we narrowly missed out, because we knew how to manage a budget. If Leeds had bit the bullet November last season and accepted they would be relegated they could have rebuilt and bounced back in a similar fashion if they had the appetite / desire. Instead they have made this bed of nails and now have to sleep on it, it is a pity Richmond had to pay for this.

Good luck to the Leeds supporters and the players the rest of the club infrastructure can Bananas

An 11 team Championship will be pants, income lost again! And season tickets bought with an expectation of a certain number of league games potentially blown out the water. But I won't begrudge my club the money.  
Onward and Upwards C'mon Donny!
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Direct Link To This Post Posted: 04 Jun 2019 at 17:00
As pointed out elsewhere, it's not just Richmond that lost out: the disappearance of Leeds from the Championship in a more timely manner could well have had a very positive ripple down effect on many clubs all the way through the leagues Cry

Me? I'm just buzzin' around!
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Direct Link To This Post Posted: 04 Jun 2019 at 17:15
Doubt it, Richmond will replace them in the Championship and National 1 will be one Club lite come September if YC go under. Can't see anything positive from that!
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