OK, for those of you who can't be arsed spending £1, here are some key extracts from the report.
4. THE CIRCUMSTANCES GIVING RISE TO THE APPOINTMENT
OK Bulls Limited ("the Company") ("OK Bulls") was Incorporated 30 August 2012 The company was formed as a vehicle to purchase the busmess and assets of Bradford Bulls Holdmgs Llmited which had proceeded mto Administration in June 2012
The company trades as a professional rugby league club and plays in the Super League at a top professional level. The club is located at Provident Stadium, Rooley Avenue, Bradford, BD6 1BS. Banking facilities were provided by Barclays Bank Pic, no overdraft facility or loans were available tothe company. The principal busmess is run through the company. However a wholly owned subsidiary Bradford Northern Rugby League Football Club (1964) Limited operates the lotteries in is own rght. The company derves its income from a number of sources, Rugby Football League ("RFL") Central Fundmg which comes pnimary from Sky Broadcasting for the televised events, game attendance, season ticket sales and sponsorship. When the club previously entered into Administration it was sold as a gomg concern to OK Bulls Limited. At the time of the purchase the only director of OK Bulls was Omar Khan. OK Bulls purchased the business and assets of Bradford Bulls Holdings Limited for £150,000, with an additional £100,000 payment due conditional upon the purchaser (OK Bulls) obtaining a franchise to participate in Super League 2015. Due to the changes in the structure of the Super League from 2014 onwards, no further franchise Will be granted and as a consequence this additional payment will no longer fall due.
In return for the granting of the Super League franchise to OK Bulls, as part of the purchase Mr Khan agreed to take a 50% reduction in the amount the company would receive from Central Funding for two seasons. The oniginal proposal by the RFL was that no central fundmg would be paid in season one of the new company, It was subsequently agreed that this would be spread over two seasons. This arrangement was to be supported by a personal guarantee from Mr Khan which would be called upon to repay central funding advances if the company failed again within that two year penod. At the time of the purchase the stadium was owned by Bradford City Council, with a lease to the RFL. The Company then took an assignment of that lease from Bradford Holdings Limited (sic). The council also made a loan of £200,000 to the company and as part of the agreement, Mr Khan provided a personal guarantee. Mr Khan went on to Inject approximately £400,000 ino the company, However despite thisl during 2013 the company started to expenence cash flow difficulties and recorded a significant loss in August 2013. In September 2013 Mr Khan resigned as a director due to health reasons. At lhis point Mr Khan appointed Ryan Whltcut as director, proposing that he would take control of the business on a day to day basis. In September 2013, Mr Whitcut Introduced Mark Moore and subsequently in October 2013, Andrew Calvert and Ian Watt Joined the company and all three were appointed directors and were brought in to assist with the running of the club.
The company was expenencing significant trading losses and in order to aid the cash flow problems, Ryan Whltcut approached Safeguard Secunty Group Llmited ("Safeguard") to request a short term loan to cover the salares of the club. The agreement was that the loan would be paid back within 6 weeks, and that Safeguard would take a debenture over the company, as secunty for the loan. It soon became apparent that Mr Whitcut was still in contact with Mr Khan and was approving payments that the other directors were not comfortable with and they felt the club couldn't afford to make. The new directors had also noted accounting irregularities and were not wiling to authonse further payments to be made without first bringing the accounts up to date. It also became apparent that there were significant liabilities that had not been initiuallyy revealed to the new directors including the Safeguard loan. The agreed six weeks past (sic) and no proposals of payment were made to Safeguard at this point.
Safeguard attempted to discuss the matter with the club and reach some agreement for repayment. An arrangement was reached for a staged repayment and a temporary reduction m the interest charges attached to the loan. On the basis of the findings in respect of the financial situation, Mr Whltcut was removed as director and his position at the club terminated. Continued efforts were made by the new directors to reduce the overheads and make Inroads into improving the cash flow. Overall reductions equating to £500,000 of annual overheads were made. However the company contmued to expenence significant losses and cash flow problems. Following a dispute between the new directors and the Mr Khan in relation to ownership of the club, all three directors resigned over Chnstmas. Subsequent negotiations between Chnstmas and New Year resulted m the reappointment of the Directors on the basis of commitments given in respect of ownership. However during the early part of January these commitments remained unfulfilled. Critically the club was getting close to the start of the new playing season and the financial and ownership position remained unresolved.
In mid-January, a winding up petition was issued by HMRC in relation to unpaid PAYE and NIC and served on the company, A petition that it was unable to pay. A decision was taken that the debenture holder was not able to allow this position to continue and was not prepared to allow the company to proceed into Compulsory Liquidation, with a likely result of a significant reduction in the value of the club and the assets covered by the debenture. Subsequently, Safeguard Secunty Group Limited therefore applied for an Admimstration Order as the holder of a qualifying floating charge and appointed David Wilson of DFW Associates as Administrator of the company in accordance with Paragraph 14.
The reasons for the company's Insolvency:
• Reduction in central funding agreed by the former director meant restrictins on cash flow
• Continued trading losses over an extended penod
• Accounting irregularities meant that the new directors were not aware of the exact trading losses
• Lack of available working capital
6. THE ADMINISTRATION PERIOD
Attached at appendiX 1 is an account of the receipts and payments from the commencement of Admimistration, 31 January 2014 to the date of th1s report. Prior to appointment it was apparent that the club only had a tangible value as long as it remained in the Super League. Following discussions with the RFL, it was clear that any purchaser would first need sanction from the RFL in order to trade as a member of the Super League. The only Interested party leading up to the Administration was the existing board who formed a new company Bradford Bulls 2014 Limited ("BB2014"). However, the Administrator has a duty to try and achieve the best result for all creditors. There were however no funds available to trade the company and therefore no extended marketing period could take place. In order to fulfil the Admmistrator's requirements, and also allow timee for the new company to obtain the reqUired sancion from the RFL, a conditional sale was agreed to BB2014 and they were to continue to trade on the basis of a licence for a per1od of one month whilst marketing took place. After that month it was intended the sale would complete, if no alternative purchaser was found.
BB2014 agreed that if a higher offer could be obtained to benefit the creditors that they would willingly step aside. BB2014 were making an offer for the purchase of the company's assets coupled with an Intended proposal to trade creditors of OK Bulls for repayment over an extended period in order to try and avoid the six point deduction that would be made due on the club entering into Administration. During this one month period other interested parties were invited to place bids to purchase the club. All Interested parties were given a final date for bidding and at that stage the highest bidder remained BB2014. On that basis the conditional contract was to complete, subject only to the approval of the RFL.
Over the next few days BB2014 had a number of meetmgs with the RFL to discuss cash flow projections and a busmess plan. However, on 24 February 2014 BB2014 advised the Administrator that they would be retracting their offer as an agreement could not be reached with the RFL. Trading reverted back to the company which has subsequently traded under the supervision of the Admmistrator since 25 February 2014, supported by funding from the RFL to cover any deficiency arising on trading and also all trading costs of the Administrator.
During this time the Administrator has worked with the RFL and other interested parties and attempted to provide as much information as possible in order for them to produce an Informed bid. Anyone wishmg to make a bid was asked to first speak to the RFL in order to meet their reqUirements in terms of a fit and proper person test, and to satisfy them in relation to proof of tunding. This was to ensure that once all bids were made, the Administrator was not faced w1th accepting the highest bid
and then for that bidder to not meet the reqUirements of the RFL.
The Admimstrator has a duty to ensure the best return to all creditors, however if the proposed purchaser does not meet the requirements of the RFL, as regards future sustainability of the business coupled with the required financial support then they would not receve a share in Super League. A closing date for all bids was given as 13 March 2014. At the time of writing, the highest bidder is in the process of reviewing and agreeing the sale contract, and completion of the sale is due to take
place before the end of March. Once completed full details of the sale will be provided to creditors.
Safeguard Secunty Group Limited hold security by way of a Debenture dated 30 September 2013 and registered 11 October 2013, granting a fixed and floating charge over the undertaking and all property and assets, present and future, including goodwill, book debts, uncalled capital, buildmgs, fixtures and fixed plant and machin ery. The amount outstanding at the date of appomtment was approximately £200,000. The loan IS subject to compound mterest at 8% a month so at the time of completion the debt is estimated to be £250,000.
All employees were transferred under TUPE to BB2014 1n accordance w1th the conditional sale agreement. However, due to the non-completion of the sale, the employee's remain employed by OK Bulls Llmited- In Administration. Upon completion of a sale the employees includmg players will be transferred under TUPE and therefore no preferential claims will be made.
Unsecured creditors are estimated to total £1,136,854. The majrity of creditor claims have now been verified to statements. Mr Khan has indicated that his claim totals £1,058,920. However an examination of the company records including all bank transactions reveal that £401,658 has been invested by way of a cash against which at the present time repayments of £26,000 have been made. As part of the Administrator's investigations all transactions with "associated" parties will be reviewed
with specific regard to any funds withdrawn from the company which could be deemed to be a preference pursuant to section 239 and would be recoverable for the benefit of the creditors.
Edited by Adeybull, 09 April 2014 - 05:04 AM.