Financial info (1 Viewer)

[Astute]

I see the debates are still ongoing on wether we will be liquidated, go into admin or just get plain shafted yet again by SISU. I have been away and got back last night, but have been keeping an eye on things here. Next holiday starts in a few days, but starting with a couple of days in my beloved Cov.

Well here I go with my tuppence worth. This is the rules on financial matters. It shows that if our club has been kept afloat with loans the FL should know all about it. Also it shows SISU would have nothing to gain in the slightest by putting us into liquidation. Admin would be looked at 1st, and all football debts would be paid first before we would have to pay 20% of any loan payments.


Here we go :-

FINANCIAL RECORDS​

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1. (a) Records to be Kept
An Affiliated Association, Competition or Club shall keep accounting records for recording the fact and nature of all payments and receipts so as to disclose with reasonable accuracy, at any time, the financial position including the assets and liabilities of the Affiliated Association, Competition or Club.
(b) Records to be Retained. An Affiliated Association, Competition or Club must retain accounting records for six years.
(c) Corporate Bodies – Accounts. An Affiliated Association, Competition or Club which prepares annual accounts in accordance with the Companies Act 1985 shall, on demand, forward a copy of the annual accounts to The Association.
(d) Unincorporated Bodies – Financial Statements. An Affiliated Association, Competition or Club which does not prepare annual accounts in accordance with the Companies Act 1985 shall prepare a Financial Statement, in such format as shall be determined by The Association from time to time. The Financial Statement shall be verified by an independent, appropriately qualified accountant. A copy of any Financial Statement shall, on demand, be forwarded to The Association.
(e) Bodies Required to Prepare only a Receipts and Payments Statement. An Affiliated Association, Competition or Club not owning gross assets exceeding ten thousand pounds shall not be required to prepare a Financial Statement under the provisions of Rule I1(d) but instead shall prepare only a Receipts and Payments Statement, which shall be in such format as shall be determined by The Association from time to time. A Receipts and Payments Statement shall, on demand, be forwarded to The Association or the relevant Affiliated Association.
(f) Errors and Omissions to be Reported. Any material errors or omissions in the accounting records of an Affiliated Association, Competition or Club must be reported by such body to The Association or, in the case of a Competition not sanctioned by The Association, or a Club not being a Full or Associate Member Club, to the relevant Affiliated Association.
(g) Documentation of loans made to a Club. All loans extended to a Club should be documented. Copies of the documentation should be retained by the Club. The loan document should include the following information;
(i) The value of the loan
(ii) The length of the loan
(iii) The interest rate charged, and whether this is fixed or variable​

(iv) Repayment terms​

(v) The full names of the individual or corporate body extending the loan

(vi) The terms in the event of a default on the loan
(vii) The document should be signed by two Club Officials or Management Committee Members who are independent of the party extending the loan
(h) Gate Records to be kept by Clubs When a Club charges for admission to a match, it is necessary for that club to have a system that enables them to;
(i) Record the full gate receipts for each match(ii) Account for the full gate receipts in the Club’s accounting records and bank account
(iii) Accurately record the number of entrants into the ground for each match. The Club should retain documentation supporting this system for six years.​

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Provisions Relating to Clubs
2. (a) General Provisions​

A Club shall include the following provisions in its Articles of Association (where a corporate body) or Club Rules (where an unincorporated association).

(i) The members and the directors of the Company shall so exercise their rights, powers and duties and shall where appropriate use their best endeavours to ensure that others conduct themselves so that the business and affairs of the Company are carried out in accordance with the Rules and Regulations of The Football Association Limited for the time being in force.​

(ii) No proposed alteration to the provisions set out herein shall be effective unless the proposed alteration has been approved in writing by The Football Association 14 days or more before the day on which the alteration is proposed to take place.​

(iii) The office of a (Director/Officer or Official)* shall be vacated if such person is subject to a decision of The Football Association that such person be suspended from holding office or from taking part in any football activity relating to the administration or management of a Football Club.(*delete as appropriate for a corporate/unincorporated body)​

 

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[Astute]

(b) Club Companies – Winding Up Provisions

A Club which is a corporate body shall have the following provisions in its Articles of Association: On the winding-up of the Company the surplus assets shall be applied, first, in repaying the Members the amount paid on their shares respectively. If such assets are insufficient to repay the said amount in full, they shall be applied rateably, so that the loss shall fall upon the Members in proportion to the amount called up on their shares respectively. No Member shall be entitled to have any call upon other Members for the purpose of adjusting the Members’ rights; but where any call has been made and has been paid by some of the Members such call be enforced against the remaining Members for the purpose of adjusting the rights of the Members between themselves. If the surplus assets shall be more than sufficient to pay to the Members the whole amount paid upon their shares, the balance shall be given by the Members of the Club, at or before the time of dissolution as they shall direct, to The Football Association Benevolent Fund, or to some Club or Institute in the (here insert the name of the appropriate city or county) having objects similar to those set out in the Memorandum of Association or to any local charity, or charitable institution situate within the said (here insert the name of the appropriate city or county).​

In default of any such decision or apportionment by the Members of the Club, the

same to be decided upon and apportioned by a Judge of the High Court of Justice having jurisdiction in such winding-up or dissolution and as he shall determine. Alternatively such balance may be disposed of in such other manner as the Members of the Club with the consent of the Council of The Association, as then existing, shall determine.
(c) Unincorporated Clubs – Winding Up Procedures Where a Club which is an unincorporated association is wound up and there are surplus assets after the payment of debts of the Club, the surplus assets shall be transferred only to a Club, Competition or Affiliated Association or The Association.
(d) Notifiable Changes. A Club shall not alter its constitution or make a material change to its financial structure without prior notification to The Association or if not a Full or Associate Member Club then the Parent Association of the Club. Any new entity shall be deemed, for the purposes of playing status in a Competition, to be a new Club. For the purposes of this Rule, an alteration in constitution or material change in financial structure shall include such as winding-up of a Club, incorporation of an unincorporated Club, an agreement by which all the assets and goodwill of the Club are sold or transferred, entry into compulsory or voluntary liquidation, the convening of a meeting of creditors or the appointment of a receiver, administrative receiver, manager or administrator or if the Club ceases for any reason to carry on business or becomes a holding company or subsidiary company within the meaning of the Companies Act.​

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[ccfcway]

what a joke our club is !

 

[dongonzalos]

Its amazing what info starts to trickle out when you start asking questions. Well done Astute

Much better than IMO, than when just typing out a dissmisive or supportive one liner.
Then when people ask them to explain their opinion futher they either ignore them or you cant and get a bit funny with them.

 

[ajsccfc]

Don, you've really got to drop this obsession with torchomatic and kduffy. It's getting uncomfortable to witness.

 

[Astute]

Don, you've really got to drop this obsession with torchomatic and kduffy. It's getting uncomfortable to witness.

There are many debates between ourselves that have come about because of the mess we are in. It all needs to stop, but this will not happen until our club that we love gets sorted out. ATM the truth is so hard to find. It can be interpreted in many ways. This means two different people can read it in totally different ways to each other and will argue as they know the truth, but both can be so wrong also :thinking about:

There is no right and wrong that can be stated as fact when we don't know the facts. We can find out what consequences are for different occurances, but without the truth we can only guess. I have had enough of guessing what is going on with our club. I only want to deal with facts from now. I have had enough of arguing with people just because of the way SISU are ruining our club and feeding us lies.

SISU, give us the players that can compete. We will be there to support them. Stop feeding us shite. If there is bad news about our club just give it to us. We will get over it. Hiding it from us and feeding us crap makes matters worse.

 

[oldskyblue58]

question ........... if assets are subject to a charge or mortgage (properly registered at Company House and at League) does that take precedence over the football creditors rule ?

 

[ericagradus]

question ........... if assets are subject to a charge or mortgage (properly registered at Company House and at League) does that take precedence over the football creditors rule ?

Yes they do, but as you rightly pointed out. The charge must be registered at Companies house and for property assests, you would also expect the charge over the property

 

[tisza]

Interesting one that OSB.
Does it matter which part of the company group holds the registrations and which holds the assets?
I suppose it would be important as to what part of the company holds the football league share.
Also for all this talk about the ACL share would the football club have to own the share in order for the income to count towards the wage regulations or could it be owned by any part of the Sky Blues group?

 

[Astute]

question ........... if assets are subject to a charge or mortgage (properly registered at Company House and at League) does that take precedence over the football creditors rule ?

From what I have been able to find out football debts come first. If there is any money left after this then it all gets shared out equally, although this can be questioned by a court of law. This is only the case in the matter of liquidation. On going into Admin the football debts have to be paid in full. The remainder should be paid at a minimum of 20%, unless there are mitigating circumstances. It can go as low as 5%. If a club can't afford to pay their football debts then liquidating would be looked at. If this was the case then all clubs would get a percentage of what is owed, although any clubs that would be put into financial trouble without full payment would be looked at favourably

 

[oldskyblue58]

next question then ..... given all assets are charged to ARVO wouldn't that leave nothing to pay the football creditors or any other creditors, if so does that leave ARVO (a SISU entity) in control of any process?

This is not the usual situation of owners battling a third party who wants to wind up the club (usually HMRC). The owners are already pretty much running the club as an "administration" whilst looking for a sale or investors - and shareholders, directors or the company itself can petition for a winding up. So what is to be gained by administration.... why pay out to administrators for something they are already doing?. Not saying they will wind up (I think they will run on a budget that is strictly within income means) but who is or would be in control of the process - CCFC, an administrator, The League, The FA ..... or is it SISU through ARVO?

ok thats 3 questions I know

 

[dongonzalos]

From what I have been able to find out football debts come first. If there is any money left after this then it all gets shared out equally, although this can be questioned by a court of law. This is only the case in the matter of liquidation. On going into Admin the football debts have to be paid in full. The remainder should be paid at a minimum of 20%, unless there are mitigating circumstances. It can go as low as 5%. If a club can't afford to pay their football debts then liquidating would be looked at. If this was the case then all clubs would get a percentage of what is owed, although any clubs that would be put into financial trouble without full payment would be looked at favourably

My tiny knowledge of civil action in terms of the recovary of debts, HMRC and the banks takes precedence over everybody else. They are always top of the pecking order then all other creditors follow in an agreed schedule as set out by the adminstrators. The creditors fight out where they come in the pecking in order in front of the judge if they are not happy. The judge can listen to them then either agrees or disagree with the schedule and he then puts on a time frame on it.

 

[dongonzalos]

My tiny knowledge of civil action in terms of the recovary of debts, HMRC and the banks takes precedence over everybody else. They are always top of the pecking order then all other creditors follow in an agreed schedule as set out by the adminstrators. The creditors fight out where they come in the pecking in order in front of the judge if they are not happy. The judge can listen to them then either agrees or disagree with the schedule and he then puts on a time frame on it.

By the above info from Astute though, it seems to always be the case Football has its own rules

 

[oldskyblue58]

From what I have been able to find out football debts come first. If there is any money left after this then it all gets shared out equally, although this can be questioned by a court of law. This is only the case in the matter of liquidation. On going into Admin the football debts have to be paid in full. The remainder should be paid at a minimum of 20%, unless there are mitigating circumstances. It can go as low as 5%. If a club can't afford to pay their football debts then liquidating would be looked at. If this was the case then all clubs would get a percentage of what is owed, although any clubs that would be put into financial trouble without full payment would be looked at favourably

Trouble I have with that is that the ARVO charge makes no mention of ranking behind anyone else. It is a first fixed and floating charge over all assets. There is no mechanism to rank it behind any other creditor. The charge would be pointless if it deferred to football creditors ( unless the ARVO debt is also seen as a football debt - which is the only secured football debt) So taking that a step further that means there are no assets with which to pay football creditors

 

[oldskyblue58]

The whole argument about football creditors arises mainly from the HMRC challenge. Debts to HMRC used to be much higher up the pecking order but now generally rank as unsecured..... the HMRC case is because PAYE forms part of the players wages then either HMRC are a football debt or the players are an unsecured creditor also. I do not think that football creditors rank above secured debts - if they did nearly all banks would not lend to clubs based on a security over the assets because they couldnt control the value of the security.

If you look at Pompey - the likes of Gaydermak and Chanrai rely on the security over the assets to get paid in full they are not splitting the assets between anyone else like players etc. Then the players etc get their cut. The property is going to Chanrai etc..... infact the premiership money due has been charged to Gaydermak so he gets all of it in so far as it satisfies his debt. That is what is making it hard to move Pompey on and why Chanrai can come up with a derisory offer of 2p in the £

 

[Astute]

next question then ..... given all assets are charged to ARVO wouldn't that leave nothing to pay the football creditors or any other creditors, if so does that leave ARVO (a SISU entity) in control of any process?

This is not the usual situation of owners battling a third party who wants to wind up the club (usually HMRC). The owners are already pretty much running the club as an "administration" whilst looking for a sale or investors - and shareholders, directors or the company itself can petition for a winding up. So what is to be gained by administration.... why pay out to administrators for something they are already doing?. Not saying they will wind up (I think they will run on a budget that is strictly within income means) but who is or would be in control of the process - CCFC, an administrator, The League, The FA ..... or is it SISU through ARVO?

ok thats 3 questions I know

These are the questions we would need to know the answers to so we can find out the answers we are looking for :thinking about:

They have done it for a reason.....maybe this is why.

 

[Astute]

My tiny knowledge of civil action in terms of the recovary of debts, HMRC and the banks takes precedence over everybody else. They are always top of the pecking order then all other creditors follow in an agreed schedule as set out by the adminstrators. The creditors fight out where they come in the pecking in order in front of the judge if they are not happy. The judge can listen to them then either agrees or disagree with the schedule and he then puts on a time frame on it.

The taxman has taken football to court over the rules as football is one of the very rare cases that comes before the taxman. Rules and laws can change, but ATM football debts come before the taxman.

 

[Astute]

The whole argument about football creditors arises mainly from the HMRC challenge. Debts to HMRC used to be much higher up the pecking order but now generally rank as unsecured..... the HMRC case is because PAYE forms part of the players wages then either HMRC are a football debt or the players are an unsecured creditor also. I do not think that football creditors rank above secured debts - if they did nearly all banks would not lend to clubs based on a security over the assets because they couldnt control the value of the security.

If you look at Pompey - the likes of Gaydermak and Chanrai rely on the security over the assets to get paid in full they are not splitting the assets between anyone else like players etc. Then the players etc get their cut. The property is going to Chanrai etc..... infact the premiership money due has been charged to Gaydermak so he gets all of it in so far as it satisfies his debt. That is what is making it hard to move Pompey on and why Chanrai can come up with a derisory offer of 2p in the £

The problem Pompey have is that the ground no longer belongs to them, so admin won't help. They have a landlord. They are tenants just like us. They can buy it back, but would need to pay what they owe for it. It would be a bit similar to us going into admin and getting the Ricoh for next to nothing. We don't own our ground either.

 

[oldskyblue58]

I also think people are forgetting who is running CCFC ........ the people involved all have great experience in corporate recovery and will be very well aware of the rules for insolvency...... they are not your usual owners or directors

 

[Astute]

Trouble I have with that is that the ARVO charge makes no mention of ranking behind anyone else. It is a first fixed and floating charge over all assets. There is no mechanism to rank it behind any other creditor. The charge would be pointless if it deferred to football creditors ( unless the ARVO debt is also seen as a football debt - which is the only secured football debt) So taking that a step further that means there are no assets with which to pay football creditors

This is the big question. We keep getting told we are not in debt. Other than to SISU that is. Now if they have found a legal way of putting it down to a football related debt then they would get paid before anyone else. The main problem I see for them is that football debts are meant to be for players and clubs. They are neither. So to me they would have to join the queue. In this case the taxman would come before them.

 

[sky blue john]

This is the big question. We keep getting told we are not in debt. Other than to SISU that is. Now if they have found a legal way of putting it down to a football related debt then they would get paid before anyone else. The main problem I see for them is that football debts are meant to be for players and clubs. They are neither. So to me they would have to join the queue. In this case the taxman would come before them.

What tax ?
They are not making a profit.

 

[oldskyblue58]

but i think you will find that monies coming in from shareholders as loans are classed as football debts. But I still think the charge will come before football creditors.

The whole purpose of the ARVO charge is to ensure SISU remain in control of the assets not whilst trading as a going concern but if they went into administration or worse - there is no other rationale that makes sense

 

[oldskyblue58]

What tax ?
They are not making a profit.

Its the VAT and PAYE SBJ

 

[Astute]

What tax ?
They are not making a profit.

Look what happened at Rangers. That was not tax owed from any profit made. How do we know we are not in line for that sort of thing. The taxman is looking into other clubs.

I am not saying we are one of those clubs, but how many would be shocked if we were?

 

[Astute]

but i think you will find that monies coming in from shareholders as loans are classed as football debts. But I still think the charge will come before football creditors.

The whole purpose of the ARVO charge is to ensure SISU remain in control of the assets not whilst trading as a going concern but if they went into administration or worse - there is no other rationale that makes sense

That would only put them at the same level as a bank loaning money to a club. I am sure the banks come after the taxman.

 

[oldskyblue58]

have sent this to the Football League

"Could you please clarify what items are taken to be football creditors as opposed to any other creditor. Also would an asset with a mortgage or charge on it be used to satisfy that debt first or a football creditor

thank you"

Sent one requesting details about the FFP rules 10 days ago and got no reply so not holding my breath

 

[oldskyblue58]

That would only put them at the same level as a bank loaning money to a club. I am sure the banks come after the taxman.

if a bank has a charge or personal guarantee they come before any unsecured creditor including the taxman

 

[sky blue john]

Agreed but there has never been an issue with vat and paye else we would have heard something.
obviously this may change if they decide to pull the plug.
We have not got an ideal situation with Arvo but if Sisu pulled the plug the assets could be sold debt free by Arvo ?

 

[oldskyblue58]

no issue we know of ......... but perhaps there is an arrears payment plan in operation which is why SISU put in 500k per month to hel;p cover that and other bills?

It is exactly what the charge does is seperate the assets from all other liabilities...... ARVO could then sell on to satisfy their debt ..... assuming Football creditors do not rank above a valid charge

 

[crowsnest]

Football creditors should be players, managers, coaches and other clubs owed money by the club. It does not include all other staff and should not include any loans from external sources.

If you do not pay your football creditors in full you lose the license to play in the league.

HMRC recently lost a case to get this rule changed.

 

[ashbyjan]

The Sky Blue Trust has been in touch with the Portsmouth administrator and is setting up a proper meeting so we can ask just these sort of questions of someone at the rockface. Please send any questions or matters you would like answered to [email protected]

OSB I personally invite you to be at the meeting in an informal capacity as your insight would be invaluable to us non-financial laypersons.

 

[Astute]

Football creditors should be players, managers, coaches and other clubs owed money by the club. It does not include all other staff and should not include any loans from external sources.

If you do not pay your football creditors in full you lose the license to play in the league.

HMRC recently lost a case to get this rule changed.

And this is the point I can't see SISU getting their debt put as the same level as, so not counted as a football related debt.

Some have said in the past that Ryton has a bank charge on it. From what I can make out this makes it before the SISU loans. That is if there is one :thinking about: So to me admin or liquidation would not make them much money if anything. So this is why there has been more cost cutting, and most probably more to come

 

[oldskyblue58]

found this http://www.pitmans.com/news/the-football-creditors’-rule

"The Rule operated by the Football League (“FL”) provides that in the event that a member club of the FL becomes insolvent then unsecured “football creditors,” including (but not limited to) players, other member clubs and the FL are afforded a super-priority for sums owed to them resulting in payment to them before all other unsecured creditors".

seems to imply that football creditors are a class of unsecured creditors and therefore secured creditors would come first.

Also for a club to retain its FL share and registration then football creditors have to be settled in full ...... but that is not the same as having a charge on the assets...... it means anyone coming in to buy the club out of insolvency has to settle any amount outstanding to football creditors but in our case would also need to settle out ARVO who are the secured creditor who would own the assets. The football creditors at CCFC are unlikely to be very great - we havent bought anyone and our wages bill has been slashed..... the value SISU put on the charged assets well that a different matter.

 

[ericagradus]

found this http://www.pitmans.com/news/the-football-creditors’-rule

"The Rule operated by the Football League (“FL”) provides that in the event that a member club of the FL becomes insolvent then unsecured “football creditors,” including (but not limited to) players, other member clubs and the FL are afforded a super-priority for sums owed to them resulting in payment to them before all other unsecured creditors".

seems to imply that football creditors are a class of unsecured creditors and therefore secured creditors would come first.

Also for a club to retain its FL share and registration then football creditors have to be settled in full ...... but that is not the same as having a charge on the assets...... it means anyone coming in to buy the club out of insolvency has to settle any amount outstanding to football creditors but in our case would also need to settle out ARVO who are the secured creditor who would own the assets. The football creditors at CCFC are unlikely to be very great - we havent bought anyone and our wages bill has been slashed..... the value SISU put on the charged assets well that a different matter.

This is what I explained earlier - secured creditors, take priority over any unsecured debtors including football creditors. This has to be the case, other no club would get funding as a secured creditor would not actually have a "secured" debt if FL took priority.

 

[ericagradus]

SISU have to correctly value assests, as anything which is not maket value/book value - will only come out in the due diligence procedure and they will have to give warranties that this is correct