Ayatollah Hermione 13837 Posted July 27, 2009 Share Posted July 27, 2009 OK, as an alleged insolvency specialist I'll try and explain Administration is often compared with Chapter 11 in the US, in that they are both primarily about giving the company protection from action by its creditors while they reorganise themselves but there are some major differences. Principally, it's the difference between who controls the process. In Chapter 11, the company retains control of its own affairs subject to oversight by the Court, in administration control of the company passes to the administrator who is an independent licensed insolvency practitioner. The choice of who gets to be appointed as administrator ultimately lies with the creditors, particularly any creditor with a floating charge over the business (a kind of mortgage) The job of an administrator once appointed is - in order of priority - first to try and save the business as a going concern, second to achieve a better realisation for creditors than would be likely in liquidation, or third to realise charged assets for the benefit of secured creditors. What that boils down to is that the administrator displaces the existing shareholders/directors and works out what's the best course with the interests of the creditors in mind. It is primarily a means of taking control of the company away from management. Administration is often used, through what's known as a "pre-pack" sale, as a means of ridding a company of unmanageable debt. The idea is the owner puts the company into administration, and buys it back from the administrator for its true net value. The creditors get the sale proceeds and the company carries on free of debt, and everyone lives happily ever after. That therefore begs the question, what would be in it for Ashley? Answer, nothing. If the club were sold as a going concern or broken up by an administrator, the sale proceeds would still be subject to all the same creditor claims as they are now. In this case, because most of the debt is owed to Ashley himself, there'd be no benefit in his taking this route. His net position would be just the same at the end of it. There is of course the bank overdraft (reputed to be about £40m) but it is likely that the bank has the first ranked security and so would clean up on whatever asset value there was on an administration sale - ie the bank would get first dibs on whatever was paid to buy the club. Thorw in the league rules about payment of "football creditors" and there is simply no benefit to anyone in administration of NUFC. The alternative insolvency process to administration is liquidation (also known as winding up). This is a terminal process in which the insolvency practitioner (the liquidator) just converts all the assets into cash and divides it up among the creditors according to security and priority rights. All of a company's contracts terminate on liquidation so player values would vanish. I read this post in my head with Penfold's voice and now I can't stop laughing. Link to comment Share on other sites More sharing options...
ewerk 30369 Posted July 27, 2009 Share Posted July 27, 2009 What I really want to know is whether admin will nullify the player contracts??? No, that would depend on the outcome of administration. Link to comment Share on other sites More sharing options...
Fop 1 Posted July 27, 2009 Share Posted July 27, 2009 What I really want to know is whether admin will nullify the player contracts??? No, that would depend on the outcome of administration. But they are free to walk away for £0 aren't they? Link to comment Share on other sites More sharing options...
johnthebrief 0 Posted July 27, 2009 Share Posted July 27, 2009 What I really want to know is whether admin will nullify the player contracts??? No, that would depend on the outcome of administration. But they are free to walk away for £0 aren't they? No, in administration the company's contractual rights are unaffected If the club went into liquidation then the contracts would be terminated and the players could walk Link to comment Share on other sites More sharing options...
johnthebrief 0 Posted July 27, 2009 Share Posted July 27, 2009 I read this post in my head with Penfold's voice and now I can't stop laughing. Link to comment Share on other sites More sharing options...
Fop 1 Posted July 27, 2009 Share Posted July 27, 2009 What I really want to know is whether admin will nullify the player contracts??? No, that would depend on the outcome of administration. But they are free to walk away for £0 aren't they? No, in administration the company's contractual rights are unaffected If the club went into liquidation then the contracts would be terminated and the players could walk Thought in the Darlington administration situation they could (and did) walk away with no fees, but . Link to comment Share on other sites More sharing options...
Guest alex Posted July 27, 2009 Share Posted July 27, 2009 What I really want to know is whether admin will nullify the player contracts??? No, that would depend on the outcome of administration. But they are free to walk away for £0 aren't they? No, in administration the company's contractual rights are unaffected If the club went into liquidation then the contracts would be terminated and the players could walk Thought in the Darlington administration situation they could (and did) walk away with no fees, but . Maybe Darlington just let them and it was mutually beneficial? Link to comment Share on other sites More sharing options...
johnthebrief 0 Posted July 27, 2009 Share Posted July 27, 2009 What I really want to know is whether admin will nullify the player contracts??? No, that would depend on the outcome of administration. But they are free to walk away for £0 aren't they? No, in administration the company's contractual rights are unaffected If the club went into liquidation then the contracts would be terminated and the players could walk Thought in the Darlington administration situation they could (and did) walk away with no fees, but . Maybe Darlington just let them and it was mutually beneficial? The administrator can disown the contracts if he thinks the cost of paying wages outweighs the value of keeping transfer/playing rights - it's his choice though, not the players' Link to comment Share on other sites More sharing options...
peasepud 59 Posted July 27, 2009 Share Posted July 27, 2009 Do the club own any land? The old training ground at Benwell belonged to the club I think. Does the club even own the academy? (Have a feeling it's another long-term lease. Makes the other stuff seem relatively worthless. None at all. Now St James' Holdings well thats a different matter, they've acquired quite a bit of land in the last couple of years.... *allegedly Link to comment Share on other sites More sharing options...
Monkeys Fist 42129 Posted July 27, 2009 Share Posted July 27, 2009 (edited) Do the club own any land? The old training ground at Benwell belonged to the club I think. Does the club even own the academy? (Have a feeling it's another long-term lease. Makes the other stuff seem relatively worthless. None at all. Now St James' Holdings well thats a different matter, they've acquired quite a bit of land in the last couple of years.... *allegedly Is it possible for Fatty to sell the club and retain ownership of the land/leases etc? Edited July 27, 2009 by Monkeys Fist Link to comment Share on other sites More sharing options...
ewerk 30369 Posted July 27, 2009 Share Posted July 27, 2009 Do the club own any land? The old training ground at Benwell belonged to the club I think. Does the club even own the academy? (Have a feeling it's another long-term lease. Makes the other stuff seem relatively worthless. None at all. Now St James' Holdings well thats a different matter, they've acquired quite a bit of land in the last couple of years.... *allegedly Is it possible for Fatty to sell the club and retain ownership of the land/leases etc? I'd imagine so, just whatever is agreed in the sale. Link to comment Share on other sites More sharing options...
Monkeys Fist 42129 Posted July 27, 2009 Share Posted July 27, 2009 Do the club own any land? The old training ground at Benwell belonged to the club I think. Does the club even own the academy? (Have a feeling it's another long-term lease. Makes the other stuff seem relatively worthless. None at all. Now St James' Holdings well thats a different matter, they've acquired quite a bit of land in the last couple of years.... *allegedly Is it possible for Fatty to sell the club and retain ownership of the land/leases etc? I'd imagine so, just whatever is agreed in the sale. Other than; Stadium Academy Training Ground What else does the club/St.James Holdings own? Anyone know? I remember the land St.James Metro is on being reputedly ours/his. Link to comment Share on other sites More sharing options...
Park Life 71 Posted July 27, 2009 Share Posted July 27, 2009 What I really want to know is whether admin will nullify the player contracts??? No, that would depend on the outcome of administration. But they are free to walk away for £0 aren't they? No, in administration the company's contractual rights are unaffected If the club went into liquidation then the contracts would be terminated and the players could walk Thought in the Darlington administration situation they could (and did) walk away with no fees, but . Maybe Darlington just let them and it was mutually beneficial? The administrator can disown the contracts if he thinks the cost of paying wages outweighs the value of keeping transfer/playing rights - it's his choice though, not the players' That's what I'm getting at. My feeling is that the contracts will be struck. I might be giving MA less credit than he deserves. Link to comment Share on other sites More sharing options...
spongebob toonpants 3956 Posted July 27, 2009 Share Posted July 27, 2009 I've got an increasing paranoia that there is some method to the seeming insanity, and things are going to get a whole lot worse. Link to comment Share on other sites More sharing options...
Guest alex Posted July 27, 2009 Share Posted July 27, 2009 I've got an increasing paranoia that there is some method to the seeming insanity, and things are going to get a whole lot worse. I think he's got a plan like. Can't work out what the fuck it is but I'd imagine it'll be a shit plan. Link to comment Share on other sites More sharing options...
Park Life 71 Posted July 27, 2009 Share Posted July 27, 2009 I've got an increasing paranoia that there is some method to the seeming insanity, and things are going to get a whole lot worse. I think he's got a plan like. Can't work out what the fuck it is but I'd imagine it'll be a shit plan. Guaranteed. Link to comment Share on other sites More sharing options...
Monkeys Fist 42129 Posted July 27, 2009 Share Posted July 27, 2009 I've got an increasing paranoia that there is some method to the seeming insanity, and things are going to get a whole lot worse. Second that. Nothing else makes sense. To paraphrase Sherlock H;"when all possibilities have been eliminated what remains, no matter how improbable, must be the answer." Link to comment Share on other sites More sharing options...
Park Life 71 Posted July 27, 2009 Share Posted July 27, 2009 I've got an increasing paranoia that there is some method to the seeming insanity, and things are going to get a whole lot worse. Second that. Nothing else makes sense. To paraphrase Sherlock H;"when all possibilities have been eliminated what remains, no matter how improbable, must be the answer." I could have a guess at it......... Link to comment Share on other sites More sharing options...
spongebob toonpants 3956 Posted July 27, 2009 Share Posted July 27, 2009 I've got an increasing paranoia that there is some method to the seeming insanity, and things are going to get a whole lot worse. Second that. Nothing else makes sense. To paraphrase Sherlock H;"when all possibilities have been eliminated what remains, no matter how improbable, must be the answer." I could have a guess at it......... gwaan then Link to comment Share on other sites More sharing options...
Park Life 71 Posted July 27, 2009 Share Posted July 27, 2009 I've got an increasing paranoia that there is some method to the seeming insanity, and things are going to get a whole lot worse. Second that. Nothing else makes sense. To paraphrase Sherlock H;"when all possibilities have been eliminated what remains, no matter how improbable, must be the answer." I could have a guess at it......... gwaan then Better not, everyone is too depressed. Link to comment Share on other sites More sharing options...
trophyshy 7073 Posted July 27, 2009 Author Share Posted July 27, 2009 Haway man, do it in the style of The Onion. Might cheer us up a bit. Link to comment Share on other sites More sharing options...
trophyshy 7073 Posted July 27, 2009 Author Share Posted July 27, 2009 OK, as an alleged insolvency specialist I'll try and explain Administration is often compared with Chapter 11 in the US, in that they are both primarily about giving the company protection from action by its creditors while they reorganise themselves but there are some major differences. Principally, it's the difference between who controls the process. In Chapter 11, the company retains control of its own affairs subject to oversight by the Court, in administration control of the company passes to the administrator who is an independent licensed insolvency practitioner. The choice of who gets to be appointed as administrator ultimately lies with the creditors, particularly any creditor with a floating charge over the business (a kind of mortgage) The job of an administrator once appointed is - in order of priority - first to try and save the business as a going concern, second to achieve a better realisation for creditors than would be likely in liquidation, or third to realise charged assets for the benefit of secured creditors. What that boils down to is that the administrator displaces the existing shareholders/directors and works out what's the best course with the interests of the creditors in mind. It is primarily a means of taking control of the company away from management. Administration is often used, through what's known as a "pre-pack" sale, as a means of ridding a company of unmanageable debt. The idea is the owner puts the company into administration, and buys it back from the administrator for its true net value. The creditors get the sale proceeds and the company carries on free of debt, and everyone lives happily ever after. That therefore begs the question, what would be in it for Ashley? Answer, nothing. If the club were sold as a going concern or broken up by an administrator, the sale proceeds would still be subject to all the same creditor claims as they are now. In this case, because most of the debt is owed to Ashley himself, there'd be no benefit in his taking this route. His net position would be just the same at the end of it. There is of course the bank overdraft (reputed to be about £40m) but it is likely that the bank has the first ranked security and so would clean up on whatever asset value there was on an administration sale - ie the bank would get first dibs on whatever was paid to buy the club. Thorw in the league rules about payment of "football creditors" and there is simply no benefit to anyone in administration of NUFC. The alternative insolvency process to administration is liquidation (also known as winding up). This is a terminal process in which the insolvency practitioner (the liquidator) just converts all the assets into cash and divides it up among the creditors according to security and priority rights. All of a company's contracts terminate on liquidation so player values would vanish. Cheers John. Link to comment Share on other sites More sharing options...
Park Life 71 Posted July 27, 2009 Share Posted July 27, 2009 Haway man, do it in the style of The Onion. Might cheer us up a bit. WASHINGTON—According to the findings of a recent Department of Health and Human Services study, school lunch programs that teach children to avoid all contact with food may not be an effective method of reducing teen obesity rates." Link to comment Share on other sites More sharing options...
ChezGiven 0 Posted July 27, 2009 Share Posted July 27, 2009 I dont think we are going to be sold anymore. If Ashley was prepared to drop his price, i reckon he would have done it by now. I think he'll say 'no-one wanted to buy at the price, so you're stuck with me". If the buyers wont match the asking price, then there will be no sale, which is how i see it going. In all of this, i wonder what would have happened had he just appointed Shearer full time and said 'there is limited funds, we need to sell but lets get on with it' instead of announcing a sale? Its funny but i didnt have the impression that militant action was about to be mounted against him after we got relegated. He did the right thing in bringing shearer in and every fan could see that it was the players not putting the effort in. Obviously he was going to get it in the neck but what else would you expect after overseeing relegation? If he wanted rid, he should be cutting his losses but he isnt. According to his accounts, he is losing money the longer he stays, there must be a reason why he isnt cutting his losses. Fuck knows tbh. Link to comment Share on other sites More sharing options...
Park Life 71 Posted July 27, 2009 Share Posted July 27, 2009 (edited) I dont think we are going to be sold anymore. If Ashley was prepared to drop his price, i reckon he would have done it by now. I think he'll say 'no-one wanted to buy at the price, so you're stuck with me". If the buyers wont match the asking price, then there will be no sale, which is how i see it going. In all of this, i wonder what would have happened had he just appointed Shearer full time and said 'there is limited funds, we need to sell but lets get on with it' instead of announcing a sale? Its funny but i didnt have the impression that militant action was about to be mounted against him after we got relegated. He did the right thing in bringing shearer in and every fan could see that it was the players not putting the effort in. Obviously he was going to get it in the neck but what else would you expect after overseeing relegation? If he wanted rid, he should be cutting his losses but he isnt. According to his accounts, he is losing money the longer he stays, there must be a reason why he isnt cutting his losses. Fuck knows tbh. I think he announced the sale to take himself out of the firing line as well as steering clear of having to do anything pro-active during the summer. Saying the club was for sale as he did was the dumbest option as it removed most of his bargaining power in one swathe as well as inviting negative eyes at our situation. Edited July 27, 2009 by Park Life Link to comment Share on other sites More sharing options...
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