An historic top-level football club, then a third-tier outfit and now a Premier League side, had been in financial difficulty for some time and under review by their bank for two years. The club desperately needed to reduce its costs and increase cash flow, and while boards came and went, fans and community became increasingly disillusioned by the failure to provide a solution for their beloved club.
When apparent that all intended strategies had failed to revive the club, the bank approached our restructuring team to advise directors on their fiduciary positions, and to see if we could propose a plan to save the football club.
Our team quickly provided a proposal which showed there was both a valuable, loyal fan base and enough goodwill for the club potentially to survive. The strategy was for directors to invite the appointment of RBR Advisory insolvency practitioners – as part of Begbies Traynor Group – as administrators to the holding company, which owned 100 per cent of the shares in the club and other asset-holding related companies, to enable a restructure to be undertaken that would include debt forgiveness.
To gain market confidence, a condition of this required the resignation of the existing board of directors of the club and relating companies (bar the Financial Director), as it was felt that the existence of the historic directorate may have deterred potential investors and fans’ ‘rescue’ support. The strategy was to engage with the fan base, particularly through press and media, to allow the club to continue trading – and critically for the team to fulfil its fixture list – until the end of the 2009 season, during which time a buyer could be secured.