Writer: Ross Molyneux
Date:Monday March 30 2009
First some words from Derek Llambias, the Managing Director at SJP:
"It's ridiculous, unfair and unfounded, and it's upsetting because there is no truth in it. We're in a situation fighting relegation where we need everybody behind us.
(If we were relegated) We'd have to restructure our own business plan like everybody else, but our finances are strong, and there would be no threat of administration.
Mike (Ashley) has been affected by the credit crunch - why should he be different to anybody else? The club is not for sale and we've made it clear. It's not where we want to go.'
Now our thoughts - why administration? The stem of the Sunday Express story that broke was that Ashley would put the club into administration should we go down. Quite how that would benefit us remains to be seen, with administration defined as:
"The role of an administrator is to get the company out of trouble and trading again if possible.
Administrators can be appointed to a company that is unable, or is likely to become unable, to pay its debts. They can be appointed by any of the following:
- the courts - on application from a creditor, directors or partners
- the holder of a qualifying floating charge over the assets of the business
- the company or its directors
An administrator's primary goal is to rescue the company as a going concern. If this isn't possible, the administrator will try to get a better result for the creditors than would be possible if the company was wound up. If neither of these is possible, the administrator will sell the company's property to make at least a partial payment to one or more secured or preferential creditors, such as employees or the bank."
Given Ashley is the company`s main creditor, with an alleged £100m worth of loans to the club, in essence he would be asset stripping the club to repay that, potentially from player sales, potentially from property sale. The whole spiel was that he had put the club on an even keel, regardless of division.
Whilst we`ve questioned his motives in the past with the likes of Given, N`Zogbia and Milner all suspiciously sold and budget buys brought in to replace them, surely any move to administration would severely impair the main assets (e.g. playing staff) under IAS 36?
The scenario remains unpalatable either way.
Date:Monday March 30 2009
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