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”.