[Wooden Spoon]

hewittfan, on 24 February 2021 - 02:26 PM, said:

The loans are still there but were transferred as part of the sale so the club now owes the Trust rather than Dave Allen.

You sure about that?

[Freddie]

DEATH, on 26 February 2021 - 01:01 PM, said:

You sure about that?

Crystal clear, it’s stated in the accounts.

[hewittfan]

DEATH, on 26 February 2021 - 01:01 PM, said:

You sure about that?

Well it's there in the accounts, do you disagree?

[Blue5]

DEATH, on 26 February 2021 - 01:01 PM, said:

You sure about that?

2.2 Going concern

At 30 June 2020 the Company had net current liabilities amounting to £11,807,337 (2019: £12,122,660). The major shareholder Mr D E D Allen sold his shareholding in the Company after the year-end on 6 August 2020, to Chesterfield FC Community Trust. As part of the transaction the loans owing to Mr D E D Allen were also transferred over to the benefit of the Trust, and the loans owing to current and former directors of the Company, and loans to companies controlled by former directors, were settled in full. The Trustees of the Trust have confirmed that they will not actively seek repayment of any loans from the Company in the foreseeable future, which is at least 12 months from the date of sign off of these financial statements.

This post has been edited by Blue5: 26 February 2021 - 01:21 PM

[isleaiw1]

Blue5, on 26 February 2021 - 01:20 PM, said:

2.2 Going concern

At 30 June 2020 the Company had net current liabilities amounting to £11,807,337 (2019: £12,122,660). The major shareholder Mr D E D Allen sold his shareholding in the Company after the year-end on 6 August 2020, to Chesterfield FC Community Trust. As part of the transaction the loans owing to Mr D E D Allen were also transferred over to the benefit of the Trust, and the loans owing to current and former directors of the Company, and loans to companies controlled by former directors, were settled in full. The Trustees of the Trust have confirmed that they will not actively seek repayment of any loans from the Company in the foreseeable future, which is at least 12 months from the date of sign off of these financial statements.

So the trust bought the assets and liabilities of the club from Dave Allen and in so doing the loans transferred to them. Technically that means the club owes the trust, but it doesnt mean the trust intends getting their hands on the money.

Nothing to worry about, does mean the club cant sell the ground and spunk the money as I am sure if they tried to the Trust would ask for their loan to be repaid. (Not that you can see the club doing what the Trust doesnt want but just on the off chance it might happen...)

[dtp]

isleaiw1, on 26 February 2021 - 01:26 PM, said:

So the trust bought the assets and liabilities of the club from Dave Allen and in so doing the loans transferred to them. Technically that means the club owes the trust, but it doesnt mean the trust intends getting their hands on the money.

Nothing to worry about, does mean the club cant sell the ground and spunk the money as I am sure if they tried to the Trust would ask for their loan to be repaid. (Not that you can see the club doing what the Trust doesnt want but just on the off chance it might happen...)

Also, the Trust has the power to write off the loans as and when it is deemed appropriate.

It has previously been inferred that the Club was debt free at the time of the takeover but, surely, this is only possible if the transferred debt is written off and the money raised from the Councils are debts of the Trust and not of the Club.

[isleaiw1]

dtp, on 26 February 2021 - 01:31 PM, said:

Also, the Trust has the power to write off the loans as and when it is deemed appropriate.

It has previously been inferred that the Club was debt free at the time of the takeover but, surely, this is only possible if the transferred debt is written off and the money raised from the Councils are debts of the Trust and not of the Club.

I think internal debt (to the owner) is different to external debt (to third parties) and therefore if the only debt the club had was to the new owner then it is a liability to one and an asset to the other so cancels out. The trust would have borrowed the money from councils to buy the club, and not the club itself. Lots of rules around using the cash of the business being acquired to buy the business being acquired that I never really understood!

[JonB]

isleaiw1, on 26 February 2021 - 01:35 PM, said:

I think internal debt (to the owner) is different to external debt (to third parties) and therefore if the only debt the club had was to the new owner then it is a liability to one and an asset to the other so cancels out. The trust would have borrowed the money from councils to buy the club, and not the club itself. Lots of rules around using the cash of the business being acquired to buy the business being acquired that I never really understood!

Isnt this what has happened with Burnley and Man Utd in the past? They
https://www.theguard...oaded-with-debt

The report says they used £30m to £40m of the clubs own money to pay off the old shareholders and the club is potentially up to £90m worse off following the takeover.

[isleaiw1]

JonB, on 26 February 2021 - 01:50 PM, said:

Isnt this what has happened with Burnley and Man Utd in the past? They
https://www.theguard...oaded-with-debt

The report says they used £30m to £40m of the clubs own money to pay off the old shareholders and the club is potentially up to £90m worse off following the takeover.

Its a long time since I had to go through a specific process as the company I worked for (at Group level) had significant cash reserves and the company buying it was taking on huge amounts of debt, and that process was necessary to stop the acquiring company using the targets cash to buy it. But we were a PLC and maybe the rules were different then....

Here you go - its called Whitewash procedure...

https://www.investopedia.com/terms/w/whitewashresolution.asp#:~:text=Whitewash%20resolution%20is%20a%20European,the%20buyer%20of%20the%20target.&text=Oftentimes%2C%20an%20auditor%20must%20then%20confirm%20the%20company's%20solvency.

[Blue5]

dtp, on 26 February 2021 - 01:31 PM, said:

Also, the Trust has the power to write off the loans as and when it is deemed appropriate.

It has previously been inferred that the Club was debt free at the time of the takeover but, surely, this is only possible if the transferred debt is written off and the money raised from the Councils are debts of the Trust and not of the Club.

Let's hope there is some clarification, because as it stands it looks to me like the Trust now have an 8 figure asset sat on their balance sheet which cost them a nominal fee by comparison.

[60s 70s Spireite]

isleaiw1, on 26 February 2021 - 01:35 PM, said:

I think internal debt (to the owner) is different to external debt (to third parties) and therefore if the only debt the club had was to the new owner then it is a liability to one and an asset to the other so cancels out. The trust would have borrowed the money from councils to buy the club, and not the club itself. Lots of rules around using the cash of the business being acquired to buy the business being acquired that I never really understood!

According to Companies House, CFC borrowed the money from the local councils, presumably so the club could settle the ‘other’ director loans. So its the club stuck with the debt, therefore in a way, like Manchester United the debt is with the club not the new shareholders.
Moreover, on another track, if the Trust was going to write off the loan asset formerly owned by DA, then why hasn’t this been done at the same time the A & S Leisure debt was written off? I suspect the debt will stand on the Trust’s accounts, so it can be used as a negotiating tool/asset when they sell their shares.

Blue5, on 26 February 2021 - 04:16 PM, said:

Let's hope there is some clarification, because as it stands it looks to me like the Trust now have an 8 figure asset sat on their balance sheet which cost them a nominal fee by comparison.

I’m sure someone will have asked the question.

[Looker-on]

Can the Trust easily forgive this debt? Would the Trust's managers, directors or trustees (whatever they are) be thought to be acting in the Trust's best interests if they did? Even if the Trust and the football club are run by the same individuals, what they might want to do as the Football Club (ie forgive the debt) they perhaps might not be allowed to do with their Trust hats on.

[60s 70s Spireite]

Looker-on, on 26 February 2021 - 04:42 PM, said:

Can the Trust easily forgive this debt? Would the Trust's managers, directors or trustees (whatever they are) be thought to be acting in the Trust's best interests if they did? Even if the Trust and the football club are run by the same individuals, what they might want to do as the Football Club (ie forgive the debt) they perhaps might not be allowed to do with their Trust hats on.

It’s a good question. Having taken over the debt, would the Charity Commission be happy to see the debt written off, without testing its value in the market? However if the debt was written off prior to their takeover, then there is no asset to be concerned with.

[dim view]

60s 70s Spireite, on 26 February 2021 - 04:47 PM, said:

It’s a good question. Having taken over the debt, would the Charity Commission be happy to see the debt written off, without testing its value in the market? However if the debt was written off prior to their takeover, then there is no asset to be concerned with.

I wish you accountants would translate this into plain English!!
Is there a problem and, if so, what is it please?

[60s 70s Spireite]

dim view, on 26 February 2021 - 05:09 PM, said:

I wish you accountants would translate this into plain English!!
Is there a problem and, if so, what is it please?

At the balance sheet date the club owed DA £10.6M. Since then this debt has been transferred (seemingly at no cost) to the Trust, so the club now owes the Trust this sum (plus or minus movements since).
The question asked is- will the club one day have to pay this sum? Ok, doubtful all of it, seeing as the Trust paid nothing for it. However in theory the Trust could insist on some sort of payment, even if just part. Especially if a third party was offering cash to buy the company. Indeed can a charity agree to write off such a valuable asset? Why wasn’t the debt written off at the same time as the A & S Leisure debt was written off?

[isleaiw1]

60s 70s Spireite, on 26 February 2021 - 05:27 PM, said:

At the balance sheet date the club owed DA £10.6M. Since then this debt has been transferred (seemingly at no cost) to the Trust, so the club now owes the Trust this sum (plus or minus movements since).
The question asked is- will the club one day have to pay this sum? Ok, doubtful all of it, seeing as the Trust paid nothing for it. However in theory the Trust could insist on some sort of payment, even if just part. Especially if a third party was offering cash to buy the company. Indeed can a charity agree to write off such a valuable asset? Why wasn’t the debt written off at the same time as the A & S Leisure debt was written off?

My thought is that is the Trust turn the club around, get it back in the League and some Hollywood stars, sheikh, rich American or whatever comes along and wants to buy the club, they will ask the new owners to settle the debt as part of the sale price. Not an expert on these things but that might have tax advantages in comparison to a straight sale with no debt to settle....

[dim view]

60s 70s Spireite, on 26 February 2021 - 05:27 PM, said:

At the balance sheet date the club owed DA £10.6M. Since then this debt has been transferred (seemingly at no cost) to the Trust, so the club now owes the Trust this sum (plus or minus movements since).
The question asked is- will the club one day have to pay this sum? Ok, doubtful all of it, seeing as the Trust paid nothing for it. However in theory the Trust could insist on some sort of payment, even if just part. Especially if a third party was offering cash to buy the company. Indeed can a charity agree to write off such a valuable asset? Why wasn’t the debt written off at the same time as the A & S Leisure debt was written off?

Ta.

Is this related to Carson disclosing that the Trust has agreed to pay Allen another wedge if it sells up? If the debt was recorded as sod all then Allen would be entitled to three fifths of it?

[60s 70s Spireite]

isleaiw1, on 26 February 2021 - 05:48 PM, said:

My thought is that is the Trust turn the club around, get it back in the League and some Hollywood stars, sheikh, rich American or whatever comes along and wants to buy the club, they will ask the new owners to settle the debt as part of the sale price. Not an expert on these things but that might have tax advantages in comparison to a straight sale with no debt to settle....

Your first sentence is my thoughts, not necessarily all the debt, but some part of it. Turns in a nice profit for the Trust. I can’t see any tax advantages to the buyer and of course the Trust doesn’t pay tax as it’s a charity.

dim view, on 26 February 2021 - 05:59 PM, said:

Ta.

Is this related to Carson disclosing that the Trust has agreed to pay Allen another wedge if it sells up? If the debt was recorded as sod all then Allen would be entitled to three fifths of it?

Not that I can see. In any event, it looks like the debt will stand at one value or another on the balance sheets, but this is to be confirmed.

[Torteval]

If the loans are secured on the ground, wouldn't it mean that the trust would have control of it whatever happened to the football club, or at least be in strong creditor position? Those who know where to check info would probably be able to clarify.

[DerbySpireite59]

Could it be that The Trust has inherited the Club's £10m loan from DA, but that it only becomes repayable should the Trust sell the Club? So the Club is debt free, but not the Trust.