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Background

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.

Immediate Action

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.

"A hands-on, partner-led approach by our expert restructuring team meant the club survived, saving jobs and benefiting the local community."

End Result

The resulting massive increase in ticket sales was followed by major secured creditors agreeing to a consensual restructuring of their debt, which ultimately included some debt forgiveness, and existing suppliers were dissuaded from taking enforcement action in relation to historic legacy creditor positions. The club was then ready for sale and together with related assets was sold in the summer off-season to a wealthy overseas purchaser.

A hands-on, partner-led approach by our expert restructuring team meant the club survived, saving jobs and benefiting the local community.

The key elements of the success can be summarised as:

  • Focused initiatives to raise cash
  • Strong decision around removal of management
  • Consensual restructuring around major creditors
  • Winning creditor support
  • Use of media to send required message
  • Determination to achieve sale
  • Creditors payment
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