PBC are pleased to announce the successful completion of the administration of Rowellian Football Social Club which included payment in full to its secured creditor, unsecured creditors (plus statutory interest) and a payment to its members.

This has been a highly complex and unusual administration from the outset, including setting a legal precedent. By way of background, the Club was a long-standing trading entity that primarily operated a social club and traded as ‘Rothwell Town Football Club’.  Whilst trading was satisfactory over its lifetime, in its latter years the Club saw a decline in business with significant losses being suffered.  Efforts to sell the Club were unsuccessful for various reasons.

Ultimately, solicitors were instructed to place the Club into administration. However, before the administration application could be filed the legal entity of the Club needed to be established.  To this end, the High Court concluded the Club’s constitution failed to meet the criteria of any recognised legal “Person” in the United Kingdom.  Despite this and after 3 separate hearings Leeds High Court laid down directions whereby the Club’s members voted to amend the constitution to be described as a partnership.  Immediate steps were then taken to place the Club into partnership administration with Gary Pettit and Alan Price being appointed Joint Administrators on 17 October 2011.

Upon appointment, the administrators made enquiries about the possibility of planning being granted to re-develop the ground and were told, in principal, this was likely. Following a short marketing plan two offers were received culminating in a sale at £1.39 million.  An application for planning was submitted.  Negotiations over the sale of the land and exchange of contracts were protracted, the exchange eventually took place in early 2014, at the same time the application for planning was submitted.

Whilst this was going on it became clear there were likely to be surplus funds available after the payment of the creditors and costs of the administration. The administrators had the unusual task of working out what to do with the surplus funds.  The Club’s constitution prohibited members enjoying any profit (or windfall).  There were no “shareholders” as such and the Club was dormant.  In the end, court directions were sought where the administrators suggested, notwithstanding the constitution, the surplus ought to be paid to the members.

The other issue was the exit route from administration. In normal circumstances an administration must be completed within one year unless creditors vote to extend or the court grants the relevant extension.  This is normally for a maximum period of eighteen months.  However, in order to avoid the inherent costs of liquidation and to enhance dividends payable, the administrators applied to court and sought additional extensions past the 18 months statutory deadline.  In total the administration lasted 5 years.

Full planning was finally granted in late 2014. However, the original purchasers decided they could not proceed with the sale and this meant further negotiations with a new purchaser, including an assignment of the contract and amendments to the planning permission including the council’s insistence the secured creditor be subject to the planning consent.  It also included complex communications with regards to the vacation of a communications mast from the site.  The sale eventually completed in March 2016.

Gary Pettit said “The hard work and commitment by all parties on this highly complex and very unusual administration has resulted in its secured creditor being paid £259,935 and unsecured creditors being paid in full together with statutory interest. I have also received claims from 100 members who have each been paid a dividend of £795.52, a nice return on a £5 annual membership fee”.

The staff at PBC were recently visited by Darren Toms of Clumber Consultancy to provide a briefing on the latest position on how auto-enrolment and other matters had affected how the pension and insolvency “worlds” interact.

During the briefing, Mr Toms raised the issue of the effects of Brexit on valuations of pension scheme liabilities which is summarised below.

As far as Defined Benefit (“DB”) pension schemes go, the key area affected by Brexit was the way in which pension liabilities are measured by reference to gilt yields. Gilt yields fell and have continued to fall since the EU referendum vote which saw the combined liabilities of UK pension schemes rise to an all-time high of £2.3 trillion on 1 July 2016. As a consequence, DB pension scheme deficits in the UK rose from £830 billion before the referendum, to a staggering £935 billion (a 12.7% increase) on 1 July 2016 alone (Source: Hymans Robertson, an independent pensions consultancy firm).

The problem is heightened for any pension schemes currently reaching their triennial anniversary to produce a valuation. If for example the scheme year-end date is 31 August 2016 then the Scheme Actuary has 12 months to produce a valuation at that date, which will then lead to difficult negotiations between Trustees and Employers throughout 2017.  Given that the pension scheme deficit has to be illustrated in the profit or loss account this could lead to a number of company failures or difficult discussions around mergers and acquisitions.

Trustees and Employers will need to brace themselves for such negotiations and ensure that there are no conflicts of interest present around the Trustee table when doing so. There are two key questions that Trustees and Employers need to ask themselves:

• Is the investment strategy for the pension scheme still appropriate considering the liabilities and longevity of the scheme?

• Is the sponsoring employer still able to support the scheme and the level of deficit recovery plan contributions that is likely to be laid out in front of them?

One thing that is for certain is that both the Pension Protection Fund and the Pensions Regulator won’t accept Trustees and Employers seeing the Pension Protection Fund as an easy get out for Employers. In addition, the Pensions Regulator will look to use their anti-avoidance powers more and more where sponsoring employers look to shirk their responsibility to their pension scheme. Interesting times ahead!

Should you feel this issue affects your business, phone PBC on 01604 212150 for a free consultation.

Further information on Clumber Consultancy can be found at http://www.clumberconsultancy.co.uk/

Joint Administrators of Bradford Bulls – no purchase concluded and business ceasing to trade

 

Gary Pettit of PBC Business Recovery, Northampton was appointed one of the Joint Administrators to Bradford Bulls (Northern) Limited (“BBNL”) – in Administration, on 14^th November 2016.  BBNL operates the Bradford Bulls Rugby League Club (“Club”), playing in the Kingstone Press Championship.

The Joint Administrators are represented by Prodicus Legal Solicitors of Leeds and Sanderson Weatheralls.

The Joint Administrators regret that following negotiations and due diligence over the weekend, the last remaining bidder has indicated that it will be unable to conclude a purchase of the Bradford Bulls.

Gary Pettit said,

“Several parties engaged in a process to acquire the Bradford Bulls, but that has ultimately proven to be an unsuccessful exercise.   Due to non-disclosure agreements, what can be divulged is strictly limited.

As I have said throughout, the situation is much more complex and complicated than any of the parties, including the RFL and the Administrators, envisaged when this process commenced.   There was fundamental uncertainty over a series of topics, including the quality of the management information available.

Bradford Bulls entered Administration for the third time in five years. This highlights that there is something fundamentally wrong with the business. The problems facing the Bradford Bulls are not unique.   Rationally, the days where a sports club operates at a loss and is underwritten by a Patron should be gone.

The biggest challenge for any purchaser of the Bulls is generating additional revenue to meet the operating costs of the club. That is why Odsal Stadium is important, for any purchaser to justify investment in redeveloping and upgrading the facilities as a stadium. To be clear, the issue has not been the potential for any other development.

The plight of the Bradford Bulls has been widely publicised. The Administrators have done everything possible to conclude a sale.

Ultimately however, the Administrators can only represent the Bradford Bulls as it is. The situation is also exceedingly difficult for the RFL as the governing body.

I am very disappointed to say that the last potential purchaser confirmed last night that it will not be acquiring the Bradford Bulls. This is largely because time does not allow the complex issues to be resolved. The Administrators are under statutory constraints as to how they must proceed.

Given the inability to secure a sale of the business, the Administrators have been left with no alternative but to make all staff redundant and cease trading. The Administrators will make the appropriate application to the Court shortly.

The Administrators wish to acknowledge again (and are grateful for) the professionalism displayed by players and staff throughout.

The Administrators are sadly conscious that the losses here extend beyond the current staff and players who will lose their jobs. Those losses extend to the families of the staff, into the community in Bradford and West Yorkshire, plus the people and businesses facing little prospect of recovering debts owed. The losses also extend to sport in general and specifically to Rugby League”.