Administration and beyond!

Sluffy, I think you are pretty close with most of this. Just to replay what we know from three documents. Firstly, the statutory accounts for 2019/20. 
Page 29 note 7 shows loan notes of £4.597 million. Page 32 shows a further £3m loan that was made by shareholders. On the same page is a note we’re all very much aware of about the £5m Future Fund convertible loan note. 
Secondly, we also know from another document, the confirmation statement dated 10th January 2022, there were only three shareholders (plus the FF, who surely couldn’t have been involved in the £3m loan); Sharon, Michael & Nick.
Thirdly, the SH01 dated 17th January shows on the second page that all three loans were capitalised or converted into equity 
Personally, although I have no proof or knowledge, I think the subsequent SH01 dated 28th January 2022 is misleading. It looks to me like a ‘holding’ document with the shares just being at their nominal value. I suspect it will be reissued later. 
However, while I can’t verify the actual numbers, I reckon you are pretty close with the amounts the three shareholders have put in. 
While, as observed, none of our owners are oligarchs (thank goodness), I don’t think that’s necessary in L1. Yes, reasonably wealthy, but not unreasonably wealthy!

BarrygoestoBolton wrote:Sluffy, I think you are pretty close with most of this. Just to replay what we know from three documents. Firstly, the statutory accounts for 2019/20. 
Page 29 note 7 shows loan notes of £4.597 million. Page 32 shows a further £3m loan that was made by shareholders. On the same page is a note we’re all very much aware of about the £5m Future Fund convertible loan note. 
Secondly, we also know from another document, the confirmation statement dated 10th January 2022, there were only three shareholders (plus the FF, who surely couldn’t have been involved in the £3m loan); Sharon, Michael & Nick.
Thirdly, the SH01 dated 17th January shows on the second page that all three loans were capitalised or converted into equity 
Personally, although I have no proof or knowledge, I think the subsequent SH01 dated 28th January 2022 is misleading. It looks to me like a ‘holding’ document with the shares just being at their nominal value. I suspect it will be reissued later. 
However, while I can’t verify the actual numbers, I reckon you are pretty close with the amounts the three shareholders have put in. 
While, as observed, none of our owners are oligarchs (thank goodness), I don’t think that’s necessary in L1. Yes, reasonably wealthy, but not unreasonably wealthy!

Thanks Barry.

I'm not totally sure what you are saying in the bit I've highlighted above, sorry.

The document clearly shows there was a share increase from the existing total of 4,125,046 to 4,838,400 (of which 241.920 are B shares).

It also clearly states that 58,929 where bought for £1 per share.

If you compare that with the SH01 registered on the 11th November and its second filing on the 17th January, they both clearly show the price paid for the shares at the time was the £8 and £6 rates.

I'm not an account by profession either but I'm pretty sure that the accountants/solicitors filing these documents would not deliberate state a misleading figure  to Companies House, so it seems to me that someone has purchased a further 58,929 A shares for FV at a rate of £1 per share.

Maybe you are right and maybe it has been done this way on purpose as a holding measure or whatever but if the shares have actually been traded at that time then someone would know at what price was received for them and I can't see any reason why the true price would not have been stated considering amounts of £8 and £6 were shown on the previous SH01.

I mean what reason have they to hide the fact?

As for the amounts we have estimated that Sharon, James and Luckock have put in for equity, you are probably right in that such investment is required from reasonably wealthy owners but how rich are they - what I'm trying to say here is say Michael James is worth £10m would he really want to gamble 30% of his personal wealth on a football club he obviously loves as he;s seen at first hand how much it cost Eddie Davies who blew his children's inheritance doing the same thing?

I know I certainly wouldn't!

Well, you have me there. My comments about the 28th January SH01 are pure speculation. However, I would advance three points in my favour. Firstly, FV has ‘previous’ in that they have reissued documents on several occasions before. Secondly, it just doesn’t make sense. Thirdly, the shares have been issued at their nominal value. 
None of that is remotely conclusive, just conjecture.

BarrygoestoBolton wrote:Well, you have me there. My comments about the 28th January SH01 are pure speculation. However, I would advance three points in my favour. Firstly, FV has ‘previous’ in that they have reissued documents on several occasions before. Secondly, it just doesn’t make sense. Thirdly, the shares have been issued at their nominal value. 
None of that is remotely conclusive, just conjecture.

I'm non the wiser than you are Barry, you could be perfectly correct in all what you say as far as I know.

I'm not sure though as there is much previous in this as per your first point above.  Yes there does seem to be some unexplained errors(?) in the prior SH01 and it's amendment and delays in filing but Brabners seem to be a well known and reputable solicitors firm who seemingly are acting for FV, so there no reason to suspect inaccurate documentation to be the norm.

I agree with your point two, in that things don't make much sense in the the share value seems to have jumped from £1 per share to over £8 per share and that back to £1 again in just a matter of weeks - coinciding with the governments loan to equity transaction (and bearing in mind the need for the government loan to be seen to be less than 10% of the ownership of the company in respect of the EFL rules on ownership of clubs!).

And for your third and final point, aren't all shares always issued at their nominal value?  

Surely that is why the price paid for shares is shown separately and specifically in a column on the SH01 form entitled the 'Amount paid (including Premium) for each share'.

For instance look at the amount of £1m outstanding for just the 117,000 unallocated shares on the Nov/17th Jan SH01 forms and just the £412,505 outstanding on the 28th Jan form for the unallocated 412,505 shares (being three times the amount of shares than the earlier 117,000 which were valued at £1m!

As I say, I don't know the answers. I'm simply trying to make sense of what has happened.

Your views may well turn out right and mine wrong it's just that I'm a bit sceptical of there being goody two shoe amateur owners taking a carefree punt with their life savings playing Football Manager for real and some Keystone Cops type of solicitors having comically cocked up the paper work to Companies House.

I tend to believe the owners are hard nosed business people who know what they are doing, not blindly taking a punt with their millions and have. in some perfectly legal way. manipulated the system to take advantage of the government scheme whilst at the same time complying with the EFL's ownership rules, whilst certainly not putting at risk millions of pounds of their own money.

No doubt time will tell which of the two scenarios above is nearest to the mark.

As we have both previously observed, Sluffy, it never has been clear how FV were really going to fund the purchase of £28.5million of assets, more than half of which were 'intangible', or how they would fund the ongoing costs in a competitive and sustainable way.

But we do know that the £3.5million lost in the first year, when the club was turning out kids on the pitch, will only have added to FV's burden.

The UKFF deal, whether worth £2.5m or £5m, has all the appearance of a scheme to gain some relief from the additional financial pressures arising from COVID. The paperwork though doesn't look like its been up to scratch, providing indications of some quite bizarre share valuations and evidently was not filed within the required time limits.

The 2021 accounts are due to be filed this month and should tell us the outcome of the second year's trading and hopefully provide some clues as to where we are now. Lets hope we don't have to wait as long as we had to last year.

In the meantime its clear that the now discontinued strike-off action against Accrington Stanley was actioned by Companies House for failure to file documents on time and failure to respond to reminders.  In their case it seemed to be the mere formality of reporting no change on their Confirmation Statement.

I'm sure you probably are aware of the following Bob but it came as news to me (when I was having a little look into how Derby was going on)

Understanding the New HMRC Preferential Creditor Status and Impact on Creditors

Published: 22nd December 2020
Following the accession of the Finance Act 2020, HMRC have had their second preferential creditor status restored. This means that when a company goes into liquidation owing money to HMRC, they will now take priority over other creditors for certain outstanding taxes.

What does creditor status mean in relation to company liquidation?
When a company enters an insolvent liquidation process such as a Creditors’ Voluntary Liquidation (CVL), all its assets are identified and sold for the benefit of creditors. The proceeds are then distributed to outstanding creditors according to a designated hierarchy as set out in the Insolvency Act 1986. Secured creditors – those which hold a charge over a particular company asset or class of asset – get paid first, with unsecured creditors sitting at the bottom of the pecking order.

Before the amendment, HMRC was classified as an unsecured creditor, ranking alongside trade creditors, credit card providers, banks, and other unsecured lenders. As of 1st December 2020, however, HMRC have been reclassified as a secondary preferential creditor, regaining the status it lost following the implementation of the Enterprise Act, 2002.

In real terms, this means HMRC will now jump ahead of both floating charge and unsecured creditors when distributions are made following liquidation. Simply put, HMRC will receive funds that would otherwise have been shared amongst unsecured and floating charge creditors prior to this change in status.

What HMRC liabilities will be affected by the change?
It is important to note that HMRC will only be treated as a preferential creditor in relation to certain outstanding taxes. This is limited to tax which has been ‘paid’ by employees and customers through the business, such as PAYE, VAT, employee NICs and Construction Industry Scheme (CIS) deductions. Another point of note is that the age of these tax debts does not matter, all outstanding arrears which fall into this category will now be given preferential status.

For tax which is owed directly by the company, such as corporation tax, HMRC will retain its unsecured creditor status.

What impact will this have on lenders?
As one of the largest creditors of companies in the UK, HMRC’s elevated creditor status is set to have a huge impact on the recovery prospects of unsecured lenders following liquidation. Returns for unsecured creditors are already low; it is expected this will cut returns even further for those lending on an unsecured basis.

Those lending on an unsecured or floating charge basis may therefore become more hesitant to provide borrowing on these terms as the chance of recovering money owed from a company which is subsequently liquidated is now even more slim. This has the potential to make borrowing on unsecured terms both more difficult to obtain and also more expensive in order to compensate for the additional risk and anticipated losses.

This does not just affect company’s looking to take out new finance; existing lending facilities are also in danger of being withdrawn in some instances if adequate security cannot be provided by the company’s directors and/or shareholders to satisfy lenders.

What will this mean for companies and company directors?
The likely outcome is that banks and other unsecured lenders will require additional security to be provided in the form of a personal guarantee from the company’s directors before lending will be agreed. A personal guarantee functions as an added level of security for lenders, providing another channel of recovering money owed should the company be unable to repay.

Once a business is incorporated as a limited company, it is given what is known as limited liability, meaning that the company is treated as its own legal entity, distinct from that of its owners. This means that any borrowing taken out by the company belongs to the company itself rather than the directors or shareholders. In the event that a limited company becomes insolvent and subsequently enters liquidation, the company’s directors will not be expected to contribute to any financial shortfall or company debts which remain.

A personal guarantee, however, put the onus on the directors to repay outstanding borrowing if the company is unable to do so. Following a company going into liquidation, the personal guarantee will crystalise, and responsibility for paying the remaining balance of the debt will shift to the director(s) who provided the guarantee.

For more information on the change in HMRC creditor status and to obtain expert advice if you feel this may affect your company, call one of our team for a free same-day meeting. Begbies Traynor is the UK’s largest professional services consultancy and operates from an extensive network of offices around the country.

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Thanks Sluffy. I wasn't aware of this change and can't say I am sympathetic to it. It puts
more power in the hands of the state and less in the hands of businesses that create the revenue the state relies on.

Does the state always control spending as well as you might wish? Maybe not. I give you John Bercow, not only profiting from minimally low taxes on substantial income of a scarcely deserved nature but putting his wife on furlough and getting yet more money from the Exchequer.

Ten Bobsworth wrote:Thanks Sluffy. I wasn't aware of this change and can't say I am sympathetic to it. It puts
more power in the hands of the state and less in the hands of businesses that create the revenue the state relies on.

Does the state always control spending as well as you might wish? Maybe not. I give you John Bercow, not only profiting from minimally low taxes on substantial income of a scarcely deserved nature but putting his wife on furlough and getting yet more money from the Exchequer.

Maybe I'm not understanding something Bob but I'm not sure I go along with you on this one.

Yes, of course I understand and agree with you about the state doesn't always control spending as well as it really should and yes 'Bully' Bercow has taken the wee wee over putting his wife on furlough, with the money his company has in the bank - but I don't think he did anything illegal doing it though?

But as far as I understand things, this change in Preferential Status for HMRC isn't to do with anything like that, it seems to be merely in respect of claiming the tax people have already paid that the company hasn't passed on to HMRC.

I see a difference here.

Unsecured creditors are largely those who have provided money or services to the business with the expectation of some financial reward back - interest on their loans, or profit on goods and services they provide, etc.

People who simply work at that company and have had their tax and employee NI contributions deducted, or people who say have bought a shirt from the club shop and paid VAT on it, aren't seeking anything from the club/business - they have simply paid their dues to the Exchequer that have been collected by that company but not passed on.

Why then shouldn't it be?

It's not actually the companies money, so why should the taxpayers like you and I take a loss when we've never actually had anything to gain from what we did?

We weren't enriching that company, we weren't looking to gain anything from that company and our money was never intended to stay in any way in that company, so why should HMRC lose out?  We paid our taxes to them, the company was merely just a conduit for it, not the end destination.

We haven't taken any risks in what we did, in fact we were legally required to pay our taxes/NI contributions - so I don't see why you view it as putting more power into the hands of the state - they are simply claiming what is rightfully theirs and were never as such 'creditors' for the money in the sense that the taxes were paid by the taxpayers too HMRC with the company merely being a conduit and not an end in itself for the money.

That's how I'm seeing this unless I've misunderstood something perhaps?

I have come across a few cases where struggling companies have maxed out their credit line with multiple smaller suppliers in an attempt to survive before finally folding, putting multiple supplier companies at risk. Where does this change in legislation leave them - and the future taxes they will continue to pay if they remain in business?

wanderlust wrote:I have come across a few cases where struggling companies have maxed out their credit line with multiple smaller suppliers in an attempt to survive before finally folding, putting multiple supplier companies at risk. Where does this change in legislation leave them - and the future taxes they will continue to pay if they remain in business?

Eh???

I thought a self proclaimed 'Business Advisor' would know simple stuff like this???

The answer is that it wouldn't effect them significantly as long as the supplier companies have not extended themselves recklessly and beyond what they could afford to potentially lose, with their credit limit to the company that folded.

If a supplier significantly trades with just one major customer and that customer folds then the supplier will go down with it (or greatly suffer loss from it) whether or not this change in status for HMRC had happened or not.

Sluffy wrote:

Eh???

I thought a self proclaimed 'Business Advisor' would know simple stuff like this???

The answer is that it wouldn't effect them significantly as long as the supplier companies have not extended themselves recklessly and beyond what they could afford to potentially lose, with their credit limit to the company that folded.

If a supplier significantly trades with just one major customer and that customer folds then the supplier will go down with it (or greatly suffer loss from it) whether or not this change in status for HMRC had happened or not.

It wasn't a question - it was a rhetorical comment on priorities.

Thought a self-proclaimed smartass would know simple stuff like this

wanderlust wrote:It wasn't a question - it was a rhetorical comment on priorities.

Thought a self-proclaimed smartass would know simple stuff like this

Hahaha!!!

It wasn't a question was it not!!!

Yeah right...

wanderlust wrote:I have come across a few cases where struggling companies have maxed out their credit line with multiple smaller suppliers in an attempt to survive before finally folding, putting multiple supplier companies at risk. Where does this change in legislation leave them - and the future taxes they will continue to pay if they remain in business?

Very rhetorical of you about the 'priorities' indeed!!!



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The latest Liquidators Statement of BWFC 2019 Ltd landed at Companies House yesterday morning and is now available to view. That's the company that, pre-FV, had owned BWFC since 1895.

It won't be of much interest to bullshitters and blatherers but there's quite a lot of interest in it to anyone interested in the facts.

Thanks Bob, it makes interesting reading indeed!

Looks as though FV (or more specifically FVWL) have in the accounting period paid just short of £1m in total (by means of 12 monthly instalments) to the Administrators as part of the purchase prise of the club (presumably the hotel is not included as that was purchased from a different administration company?)

The report goes on to state PBP waived their charge on BWFC 19 (and took up an identical one with FV instead)).

Unsecured creditors will be being paid 35p in the £ and the overall total will amount to around £5.5m (although it is expected to be less as some creditors have already settled outside of the proceedings separately already and presumably for less(?).

I start to become a little confused at this point onwards.

The way I read it is that there is some agreement to pay (some of) the creditors and the Expenses Claim (I believe this to be those of HMRC in dealing with the issues arising following from the liquidation stage?) in instalments


The expenses of £985,387 is being paid over 24 months started Oct 21 and £2.5m of the creditors (full) amount which equates to a sum of £900k at 35p in the £ starting this month (March 2022) in 6 monthly instalments over a three year period.

I'm guessing therefore that the balance of the unsecured creditors sum (£5.5m - £900k = £4.6m) will be paid in full by FV to the Admin to settle other remaining unsecured creditors presumably on the third year anniversary of purchasing the club (August 2022) or sooner?  In fact payment to unsecured creditors to be paid 'forthwith' is mention (p16 of 27).

Anyway because there is now a three year 'window' to pay the £985,387 above, it has been agreed that the liquidation period will be extended for a further 3 years and that will incur a further cost of £500k to the liquidators which will have to be borne by FV.

Some good news (sort of) is that it looks as though FV have paid off around £1m of the Administrators original fees which totalled £1.35m.  The bad news is that the Liquidators fees have now begun to accrue and up to the 26th Jan 2022 amounted to £384,882

Further bad news is that the liquidators will incur costs of £528,463 that FV have agreed to pay off in instalments over 15 months.

It seems (I'm getting a bit confused again) that although nothing has been paid as yet to the 'liquidator' per se (p15 of 27) a sum of £126k of already agreed fees for Administration AND liquidation have been drawn from FV in excess of the £258k agreed and this 'over payment will be credited to the 'Liquidator' Administration agreed fee to bring it down to around £680k (p20 of 27) which FV have agreed to pay.

£384k plus £528k minus £126k = £780k though???


So as I see it (I could be wrong) FV still owe Warburton £3m, PBP £6m, UK Gov Bank £5m (held in shares), £5.5m unsecured debtors of which £4.6m is imminent for payment, £1m HMRC (expenses dealing with liquidation issues) £200k outstanding from Administration fees and £680k accruing for Liquidators fees.

That's before you consider the £3.5m trading loss from FV first year of trading and whatever it will be with the accounts due imminently!


As I've said many times before I simply can't understand how the numbers stack up sufficiently for FV to want to be here in the first place and can't begin to fathom how they are ever going to recoup their losses.

But then again they must be doing all this for a reason.

Let's hope the money doesn't run out before they achieve it!

Thanks Sluffy. I think I'll need to read this two or three times before reaching conclusions but on first reading it seems to confirm most of what we have both suspected for quite a while.

I expect we'll have to wait a few weeks to see the hotel liquidators statement but hopefully not as long to see the 2021 accounts.

Rubin's are now part of Begbies Trainor; also administrators/liquidators of 'our friends' down the road at Wiggin.

Thanks Bob & Sluffy for pointing out the availability of the Liquidator’s statement and for the analysis. 
One item I’d highlight is that the UK Gov Bank (Future Fund) debt is not outstanding. It was converted into shares and I don’t believe it can be converted back. The Future Fund will simply get 8% or so of the proceeds if the club is sold. 
I’ll have a better look at the statement and see if I can make sense of any of the other items.

Thanks Barry, you're very welcome to my financial musings although I don't claim that I get them all right every time.

You are right about the Future Fund, I just added it on to the list more in terms of illustrative purposes really - we still don't know if the loan was for £5m or £2.5m and also at the time of its conversion to shares, a Bolton fan who I believe is a college finance tutor, tweeted a supposed extract from the general terms and conditions of the loan which seem to suggest there was a 200% premium in favour of the FF on their shares when the business is sold.  I never tracked the source down for my own satisfaction to see if that was true or not.

Whether it is or not, and whether the loan is for £2.5m or the full £5m, my general point was intended that there was a degree of liability to FV that wasn't there before and as such was 'hanging over them' in a sense.

But you are absolutely right to have made the point you have done - thank you.


One thing that crossed my mind since posting my initial thoughts albeit only a minor thing was that of payment by FV to the liquidator of some £500k to pay for his services for the next 3 years of the liquidation process.

If I understood the document correctly (maybe I haven't?) it struck me as odd that the payment terms were over the next 15 months - meaning FV will have paid in full for a service which would still have another 21 months to run at that point?

There's no reason not to expect the service not to be delivered but I just thought it to be an unusual thing to be doing?

Not that it matters much in the scheme of things.

I look forward (and no doubt Bob will too) to reading your views and opinions on the statement once you have had time to digest it all.

Oh and a quick hello to Bonce who follows our ramblings on these matters - fair play to you doing so mate as they are difficult things for us to grasp and we've had a degree of training and experience in these matters and we clearly struggle with working out exactly what seems to be going on!

If you ever have any questions just ask and I'll try my best to answer them if I can.

A few more musings.

I know people are still questioning the amount that the Future Fund actually contributed.  Having looked into this a bit further, re-read the 2020/21 FVWL accounts, and spoken to someone I know at another company that took a much smaller amount of Future Fund money, I'm all but certain that the Future Fund themselves will have put £2.5m into the company alongside £2.5m from other (presumably the existing) investors.  The way the FF works is that the money goes in as a convertible loan note.  If the loan note is redeemed, and as far as I can see, this can only happen after 36 months, the FF has to be paid back twice the debt.  If, on the other hand, there is a new investment round of adequate size before 36 months then both the convertible loan held by the FF and the other investors gets converted into equity at 20% discount to the round.  If the company is sold within 6 months of the conversion the FF gets back 200% of its investment - this is called an anti-embarrassment clause.  So, my reading of the situation is that the FF put in £2.5m, originally as a loan, the loan converted and now the FF own around 8% or so of the company and, because more than 6 months have passed, they just sit alongside other shareholders at the same terms.  So, the other shareholders have experienced some dilution as a result of taking FF money, but now have a non-influential shareholder sitting alongside them while not increasing the debt.  I can't really say whether or not the other shareholders see that as a win or not, but that's the result.

I'm still working through the other items, so more later - I'll bet you can hardly wait!!

Thanks Barry that is very interesting.

I'm still a bit stuck on the 20% discount though?

The second filing of the Statement of Capital for the 29th October 2021 shows 1,399,566 shares being sold at £6.7878 which I take to be the 20% discounted price?

If so, the Confirmation Statement of the 10th January, 2022 shows FF only holding 393,881 of them.

The Confirmation Statement also states that there were 4,125,046 shares in FV in existence at that time which matches exactly to that total of the shares in existence at the point of the allocation a few months earlier in October.

So I'm having trouble seeing how it all matches together.

The only others who are shown to own FV shares are Sharon, James and Luckock - there was however 750,000 shares held by FV (Whites) Ltd but they were 'transferred' (whatever that means) on the 26th October (just 3 days prior to the allocation) and are not included in the total of 4,125,046

So if the shares sold at £6.7878 were an intended FF discount, why then did (presumably) some/all of the other three share holders purchase the remaining million or so discounted shares?  Also if the FF loan was for £2.5m and equally match funded (£2.5m) by some/all of the others - and they were somehow eligible for the discount too, then why have they ended up with a million shares for their £2.5m and FF only 400,000 shares of theirs?

I'm not saying you are wrong about anything you have written - I don't know any better myself - but clearly there must be more to this than what we've gathered so far?

Bob and I have given up digging for the moment as the accounts are due shortly and they my give us a better steer on things, you may wish to consider doing the same as it might save you some wasted time for the sake of waiting a week or two until they are published perhaps?