Worcester - Atlas have until 2nd May to complete purchase

[MarleyWasp]

Worcester Warriors: Atlas sale must be confirmed by 2 May, say administrators

Begbies Traynor, the former Premiership club's administrators, has issued a 27-page progress report outlining the work it has done since first being appointed last September.

In it, media speculation of a 90-day completion clause has been confirmed.

This dates back to when Atlas partners Jim O'Toole and James Sandford were officially appointed on 1 February.

Since then, Atlas have withdrawn their application to play in next season's Championship and attempted a form of merger with fellow Worcestershire club side Stourbridge, in an attempt to avoid having to restart too far down English rugby's pyramid.

They also outlined a plan to rebrand as Sixways Rugby, although that upset so many supporters that they quickly had to do a U-turn.

They then said at a public meeting at Sixways on 18 February that an agreement in principle had been struck for fellow financially-stricken neighbours Wasps to play at the ground next season.

But, despite requests to talk to both O'Toole and Sandford, nothing has been said publicly from either club since.

And, although verbal agreements are supposedly in place for Warriors' women's team and local non-league football side Worcester Raiders to utilise the artificial pitch at Sixways, they are both subject to the Warriors takeover being confirmed on 2 May.

Fellow bidder Steve Diamond, the former Worcester director of rugby - whose own bid was not taken up by Begbies Traynor - is currently out of the running, having taken up a consultancy role with Edinburgh.

But that was only a short-term appointment until the end of the season - and it has also been reported that he, in a proposed alliance with main former club sponsor Adam Hewitt, remains a serious contender.

Analysis - Highlights of Begbies Traynor report
Trevor Owens, BBC Hereford & Worcester sports editor

The progress report has been produced by the administrators, solely to comply with their statutory duty to report to creditors.

They confirm that Atlas paid an exclusivity fee of ?500,000 as a non-refundable deposit - and that completion is due on or before 2 May.

It is also stipulated that Atlas cannot dispose of Sixways Stadium, or the land surrounding it, for five years after completion.

Begbies Traynor also says the concept of rugby creditors does not exist under the act. In fact, it is fundamentally at odds with certain insolvency principles.

[Bloke in North Dorset]

That explains why Wasps can't announce anything if the plan is to play at Sixways, Atlas aren't the owners.

If Sixways is the plan I hope there's a Plan B as Atlas don't look like completing and the I don't think the Administrator will want to try to sell with a sitting tenant or try to run the stadium themselves while they search for a new buyer.

[Neils]

Thanks for posting.

An interesting statement -

Begbies Traynor also says the concept of rugby creditors does not exist under the act. In fact, it is fundamentally at odds with certain insolvency principles.

[NellyWellyWaspy]

That explains why Wasps can't announce anything if the plan is to play at Sixways, Atlas aren't the owners.

If Sixways is the plan I hope there's a Plan B as Atlas don't look like completing and the I don't think the Administrator will want to try to sell with a sitting tenant or try to run the stadium themselves while they search for a new buyer.

Pretty much confirms what I said a few weeks ago. I don't think Atlas will complete, as the RFU have publicly said they will not allow the Stourbridge deal to happen. There is no way Wasps will afford any rental deal, and I suspect that Solihull Moors have long since gone off their deal.

The problem Wasps have are two fold. No ground, and no finance. It is already far too late to sort things out for next September (they would have to be ready for the cup games), and the RFU have said NO to delaying it for a year. The RFU have also refused to say whether Wasps would ever be allowed back in to the PRL, as it looks increasingly likely that the RFU/PRL are looking to ring fence the PRL to 8 or 10 clubs, and say to all other clubs, 'You're on your own.'

So, no chance of promotion would mean no finance, which in turn would mean not paying the rugby creditors. Which puts Wasps in the same place as Warriors. Dead. I am sure it wasn't what the RFU wanted, but may have been what the richer PRL club owners wanted.

Wasps also know, as the RFU have made clear, it cannot merge in the way Atlas had proposed to catch a ride up the leagues. They might allow a merger much further down, but ...

That isn't to say it's all over, but it is getting mighty close.

[NellyWellyWaspy]

Thanks for posting.

An interesting statement -

Begbies Traynor also says the concept of rugby creditors does not exist under the act. In fact, it is fundamentally at odds with certain insolvency principles.

Yes, as it treats certain creditors preferentially, which is not allowed under insolvency law. If Rugby creditors were paid, it would open up the new owners to legal challenges in Court for payment to all creditors. It would get expensive and inevitably end up going all the way through the civil courts, and we know how long that could take. My wife's view (as a retired Insolvency Practitioner) is that the Courts would likely rule it illegal. Meaning that the RFU is asking Phoenix clubs to do something illegal. Which would then open up the RFU liable to legal action. Wasps new owners have nothing to lose, and should go ahead even now and slap the RFU with such an action. That would wake someone there up. That might force then to remove the payment of rugby creditors rule. And also, they would then have to give Wasps and Warriors the extra time they would need.

[BlackAndGoldSunglasses]

Talking of extra time needed, worth noting that 2nd May is a week today.

Next Monday, 1st, is a Bank Holiday.

No chance.

[DGP Wasp]

Thanks for posting.

An interesting statement -

Begbies Traynor also says the concept of rugby creditors does not exist under the act. In fact, it is fundamentally at odds with certain insolvency principles.

Yes, as it treats certain creditors preferentially, which is not allowed under insolvency law. If Rugby creditors were paid, it would open up the new owners to legal challenges in Court for payment to all creditors. It would get expensive and inevitably end up going all the way through the civil courts, and we know how long that could take. My wife's view (as a retired Insolvency Practitioner) is that the Courts would likely rule it illegal. Meaning that the RFU is asking Phoenix clubs to do something illegal. Which would then open up the RFU liable to legal action. Wasps new owners have nothing to lose, and should go ahead even now and slap the RFU with such an action. That would wake someone there up. That might force then to remove the payment of rugby creditors rule. And also, they would then have to give Wasps and Warriors the extra time they would need.

Interesting. This issue alone could already be being challenged by either or both sets of administrators. Further evidence that the RFU doesn't know its gluteus from its humerus!

[DGP Wasp]

Wasps also know, as the RFU have made clear, it cannot merge in the way Atlas had proposed to catch a ride up the leagues. They might allow a merger much further down, but ...

Counties 2 low enough? There's an amateur club in Acton that would be a very good match.

[baldpaul101]

The problem Wasps have are two fold. No ground, and no finance.

I don't see those as necessarily being correct. No ground. Probably not no.
But if New Wasps got permission from the RFU to buy Wasps they must have been able to provide proof of enough money to pay rugby creditors & finance a sensible plan to run a club. How can Wasps now have no money to do the very thing they are supposed to have proved to the RFU?

[NellyWellyWaspy]

The problem Wasps have are two fold. No ground, and no finance.

I don't see those as necessarily being correct. No ground. Probably not no.
But if New Wasps got permission from the RFU to buy Wasps they must have been able to provide proof of enough money to pay rugby creditors & finance a sensible plan to run a club. How can Wasps now have no money to do the very thing they are supposed to have proved to the RFU?

It is entirely possible that the initial (approved) proposal had backers that were conditional on the RFU accepting, and other conditions (such as having the opportunity to gain promotion), the latter of which the RFU has subsequently resolutely refused to confirm, which might have caused the (at the time) arranged finance to fall by the wayside, and force Wasps to hunt for an alternative, which, by the sounds of things, they have not succeeded with.

The RFU theoretically allow Phoenix clubs, but now will not let them get promoted. Without that potential financial gain, no-one will agree to pay rugby creditors, so the Phoenix rules are useless. Think how annoyed many Championship clubs will be when final confirmation comes that the trapdoor works one way only. I suspect it will be the straw that breaks the camel's back. Let alone the effect that laying off 100 professionals and dumping them out of the game is going to cause to recruitment at junior level, plus as many again if 3 additional PRL clubs finally go under. Even in my very cynical eyes, I can see that this is far worse than I thought it would be.

Do you remember Pro rugby, someone will ask 20 years from now? It will be about as entertaining and competitive as pro wrestling, shown only on some third rate obscure sports channel.

[Neils]

Lets remember with the lack of official Wasps words all we have is spurious leaks and speculation from a bunch of pay by the inch hacks. Nothing positive or negative has been said by Wasps since 18th Feb when they refuted the Atlas claims about Sixways.

Like everyone I am by now thoroughly pissed off and can't see anything happening. Maybe if they have some money and desire they should pour it into the Twyford Ave Wasps entity. I suppose there may be surprises yet but I am certainly not holding my breathe.

[baldpaul101]

Interesting commenst on the Warriors board re the Atlas report:

"The Administrators set out their argument in respect of accepting bids quite clearly:-

"As such, when assessing competing offers it would not be appropriate for us to prefer an offer that provides for repayment of rugby creditors ahead of an offer that does not, merely because rugby creditors would be repaid under that first offer. If this position was taken, then the secondary preferential creditor (HMRC) would be adversely impacted by proceeding with an alternative offer"

Much has been made in the past about which bidder would or would not settle rugby creditors. Various figures have been mentioned but it is clear from the report that even the RFU itself has yet to interpret its own definition. By way of example the report mentions that one Premiership club has claimed close to half a million pounds in respect of a cancelled game and that other clubs were considering doing the same. Thus a figure of maybe ?4m could be claimed just in this one single category alone.

I therefore do have to say that in this respect, and in this respect only, I fully understand the Atlas point of view. There was no agreed final total of rugby creditors. If there was, it might well have amounted to well over ?10m in total. That amount could simply not be justified in business terms."

Can other prem clubs really be claiming money for missed games as "Rugby debt? I thought the rugby creditors had been defined, but amounts could fluctuate due to original contracts expiring and other technical matters?

[Bloke in North Dorset]

This all seems quite straightforward and I think we've discussed it before, the Administrator and RFU/PRL are independent entities.

The Administrator has an obligation to get the best deal possible for all the creditors, and there is a seniority in those creditors. What the RFU and PRL require as re-entry to the leagues is none of their business and they can't take it in to account when assessing bids.

The RFU can make up their own rules about whether or not someone buying a bankrupt entity will be allowed back in to the professional game and that should be nothing to do with the Administrator.

The value of the bankrupt entity is seriously depressed by the RFU/PRL requirements but IMHO (IANAL) that should be nothing to do with the courts.

[NellyWellyWaspy]

The RFU can make up their own rules about whether or not someone buying a bankrupt entity will be allowed back in to the professional game and that should be nothing to do with the Administrator.

Only insofar as those rules do not, or require a third party to, break the law. It could be argued that the rugby creditors rule does just that. Curiously, that same rule also depresses the likely value of the club name and goodwill.

[Egret]

Can other prem clubs really be claiming money for missed games as "Rugby debt? I thought the rugby creditors had been defined, but amounts could fluctuate due to original contracts expiring and other technical matters?

Most if not all commercial contracts exclude consequential damages such as loss income so it will be interesting to see what precedent is set - has anyone ever used the phoenix club provisions to re-establish a failed rugby club?