Worcester liquidation hearing taking place at the High Court today:
https://www.theguardian.com/sport/2022/oct/04/wasps-granted-more-time-to-fix-financial-mess-while-worcester-brace-for-worst
Depending on the findings of the court (and I'm no expert here), then Worcester can expect to be wound up, relegated and the players contracts torn up. Seeing on social media that PRL may remove the "P share" from Worcester too, effectively stripping them of top club status.
Obviously different circumstances, but the PRL attitude seems to strike a different tone to when a certain other club was relegated due to irregularities.
We, of course, have a vested interest in seeing how this one goes.
With the case before the High Court, it is not a difficult case to hear. The judge will ask the first question:
1. Has this particular debt been paid in full?
If the answer is 'No' then the company will be placed in to Compulsory Liquidation, and the case handed to the Official Receiver. The OR will then offer the work of winding up the company's affairs to an Insolvency Practitioner, usually from the OR's rota. In exceptional cases, where there is a public interest involved (and I would argue in this case there is), the Official Receiver's staff themselves will handle it all. This happens often where there is clear evidence of malpractice by the directors and a prosecution and other court actions (such as preferential transfer of assets and payments are involved), where the court can be asked to reverse said transactions.
BUT, bear in mind that the company in the court case on Wednesday is unlikely to be the one holding the assets (like the player contracts).
2. Even if the debt HAS been paid, the judge will ask if other debtors are still owed money (they are), and will still place the company in to Compulsory Liquidation.
Only if all debtors appear to have been paid would the judge dismiss the petition. I suppose the judge could postpone/delay the decision, but not very likely.
As a director of a company, you really do NOT want to be in this position. It is the end of the road, and life is going to start to get very painful. You really should have sorted it out long before this point, even if it was to place the company in to Voluntary Liquidation. Failure to do that is in itself punishable. Typically, a business should have gone in to administration about 18-24 months before a Compulsory Winding Up order is made, gone in to Voluntary Liquidation about 12 months prior. At least, when I have looked back at the decline of businesses that came my wife's way, that was what you saw over and again.
Compare that to Wasps, and Wasps have already gone past that 18-24 month point, and are now at the point where Voluntary Liquidation is almost the right option. Should they fail to secure re-financing, an Administration process will be of little use at this point. That should have happened when it became probable that the bonds could not be redeemed (and ignoring any last minute financing at that point, as hope does not come in to it).
I would guess a few more clubs are close to the point where they should be entering administration.
The trouble is, there is that Damoclean sword that the PRL rules mean that to do so they face relegation. But those are just rules, whereas the duty of a director are clear under the law.
Hanged if they do, hanged if they don't.
I am totally puzzled as to what all this delay at Wasps is.
Finance is likely from two possible sources:
1. A financial Institution
Any institution that recommends this deal to its investors as being a good one would be lying, and thus would not do it. There is no way to gloss over this. If someone sees this as an investment, they will lose at least £50m up front, and thereafter millions every year. I could be wrong, but that would be an insane investment, no matter how it is dressed up. My worry is that this is what Wasps are proposing. I seriously doubt they can pull off such a con.
2. An uber rich buyer.
A rich buyer, one who makes as much money in a day that Wasps need now and in the future, is the only viable solution. It works for a couple of other clubs and is the only long term model for Rugby to survive. It is what keeps other big money sports going, like football in Europe, and many sports in the USA. What would be the delay here? The reluctance of current stakeholders to hand over the reins of ALL the constituent parts of the business, and the need to obtain agreement from the stadium owner (the Council) and CCFC (the tenant). It might be that the potential owner wants to actually own the stadium, not just lease it. That all takes time. Time that Wasps do not have.
They now have 10 working days to do the deal. If it is option #2, any work done for one buyer can transfer to another buyer for due diligence and willingness to transfer/sell assets purposes. The contract would be the same, just change the names.
Always a Wasp