Carl31 posted this as a comment on a piece earlier this week. Unaccountably I missed it when going through comments and thought others might have done so too.
Carl started by quoting a section from my post, shown in bold below, before adding his own comments.
“One of the perennial issues about penalising football teams relates to what happens after a change in ownership. The argument goes that, if the team is sold off, why should the new owners and the innocent fans pay for the wrongdoing of the incompetents or worse who formerly owned the club?
That however simply ignores the nature of corporate entities. If that interpretation was allowed to prevail, then a football club could commit the most heinous rule breaches, and then have its assets sold to another company before the disciplinary process concluded. Thus the “club” would be innocent and all the fault would lie on the old owners. This would be the case even where the assets were sold by one company to another owned by exactly the same people!”
In the commercial world, this happens and doesn’t seem to be an issue for most. When a company folds, unable to pay its creditors, the new company that takes on the assets is not held responsible for the misdemeanors of the previous owners. If the new owners are the same owners as the old owners they fall foul of laws on ‘phoenixing’. Continue reading
In response to my post re Gratuitous Alienation earlier this week, I noticed that Clarkeng made a few comments disagreeing with my thesis. I think that there may be crossed wires on our parts so I thought I would clarify my argument.
Some of Clarkeng’s comments are indented below, with my responses in bold beneath.
As far as BDO challenging D&P about the value achieved for the sale of the business and the assets I do not think you will hear anything further despite Paul’s suggestion.
To be exact BDO would NOT be challenging Duff & Phelps. Instead they would be “challenging” the purchaser, Sevco Scotland Ltd (now Rangers Football Club Ltd). An administrator acts as an agent for a company in administration, and the actions of the administrator are the actions, legally, of the company.
This is unlike liquidation where the actions are those of the liquidator, as the company is in no state to take any action itself.
As for time scales, if there is to be action by BDO regarding an apparent gratuitous alienation, then I would not expect it until near the end of this year, at the earliest. Liquidations take time, especially where there are as many complications as seem to exist in the case of RFC 2012 PLC. Continue reading
Whilst the Rangers story last year was about, as it is now presented, the company which owned the assets and business which made up the football club, going into administration, the situation this year at Hearts comes from the opposite perspective.
Here it is the bank which is owed huge sums by the company which owns the assets and business which make up the football club going into administration. Simples!
Ukio Bankas, the Lithuanian Bank largely owned by Vladimir Romanov and his UBIG Group has been placed into administration, and the administrators are looking for buyers for the assets. That suggests that the value which UBIG can attribute to its involvement in Hearts will be slim to zero, and slim left town. Continue reading
Yesterday I wrote about the new HMRC petition to wind up Hearts over a tax debt in excess of £400,000.
The announcement of this, which the Hearts Board had to do if they wish to proceed with their share issue, was followed by an apocalyptically titled letter to the fans – The future of Heart of Midlothian.
It reads as follows, with my comments in bold:-
Today the Board of Heart of Midlothian plc is writing to you with the express wish that every supporter provides emergency backing for the club.
This is not so much a request as a necessity.
To use the words yesterday of John Robertson, one of the greatest players in this club’s history, this is a “Call to Arms”.
There is no greater need than now for supporters to invest in the club in whichever way you can, without delay. How can you do this? Continue reading