Portland Business & Financial Solutions The way forward, made brighter


Bolton Wanderers facing insolvency

Eastleigh Football Club’s FA cup opponent, Bolton Wanderers, may have more on their mind than football following the service of a winding-up petition by HMRC.

This month Bolton Wanderers confirmed that they have received a winding-up petition from Her Majesty's Revenue and Customs for around £600,000 in unpaid taxes.

The Championship club which has recently been drawn to play against local team Eastleigh FC in the FA cup are currently sitting bottom of the league without a league win since September. It is reported that the debts within the club amount to £172.9m.

The players were not paid in November which is an obvious worry for the club but made more problematic by the possibility of players leaving in January for free if not paid for two consecutive months, as it will amount to a breach of contract.

There are understood to be four parties interested in taking over the club and it may be possible that the current owners might consider placing the company into administration as a way to protect the club until a takeover is sought.

Administration is an insolvency procedure which provides a company with wide-ranging protection that prevents any other insolvency procedure. However, an important note for the fans is that if Bolton enter administration they will automatically be deducted 12 points.  This is something that the club will undoubtedly want to avoid because it would almost certainly secure Bolton a place in League one next year.

Will Bolton be forced to sell players?

To avoid insolvency the club will need to come to an agreement with HMRC or come up with the money to settle the arrears.  This option will almost certainly include selling some of the clubs most valuable assets, being their players, in the January transfer window.

As well as the short term cash injection to keep HMRC at bay, the club will need a long-term plan. It is reported that the owner may write off loans totalling almost £185 million in order to accelerate the sale of the Championship outfit.

Could this have been prevented?

In December 2013 Bolton announced debts of almost £164million. The club issued a statement at the time that said everything is fine and that the main benefactor would ensure that the club is OK.  We have all seen this before, the overspending by the clubs in the second tier to try to gain entry into the promised land of the Premier league and the excessive levels of spending that can only be sustained for a few years within which time promotion must be achieved.

It would seem that the UEFA Financial Fair Play Regulations (FFP) which were  agreed in principle in September 2009 are yet to make a difference to clubs in the English leagues. It makes you wonder how many well run teams that clubs like Bolton are taking points off of with their overspending.

What’s next for the club?

The specialist brought in by the club to preside over the issues has said that the players will get paid at the end of the month but they cannot be sure how much. It is thought that the PFA (Professional Footballers' Association) will help to provide funds to cover the balance. If the owner agrees to write off his debts and a consortium can complete a purchase in short order the club may be able to avoid administration.
 

Are you having issues with HMRC debts?

HMRC are one of the most likely creditors to take action against companies for unpaid arrears and a build up of debt to the revenue should not be ignored.

HMRC appear to be increasing pressure on companies who fall into arrears with VAT, PAYE and Corporation Tax. Despite this pressure and the threat of winding up, HMRC are more interested in securing underpaid taxes than forcing businesses into liquidation.

There are options available to companies to deal with the pressures being exerted by HMRC.

Approach HMRC and ask for time to pay off the arrears.

This is known as a Time to Pay Arrangement. It is important to tackle the possibility of becoming insolvent before HMRC takes control of the situation. At Cashsolv, we have successfully negotiated a number of Time to Pay Arrangements.

If you are considering a Time to Pay Arrangement, HMRC will require the following information:

  • An explanation as to why the company is not able to pay the arrears.
  • A proposal detailing how the company proposes to pay off the arrears – this will include the amounts to be paid and dates when payments are to be made. It is usual for the arrears to be cleared over a period of up to 12 months.
  • A cash flow forecast to demonstrate that the company can afford to clear the arrears.

Providing that HMRC is satisfied that the business is viable and it will be able to pay off the arrears over the proposed time period then it will formalise the agreement. HMRC will insist on all future taxes being paid on time and in full.

Formalise the position with a Company Voluntary Arrangement

A Company Voluntary Arrangement (CVA) is a one off legally binding agreement with your company's creditors, whereby the creditors agree to be paid what the company can afford, not necessarily what is owed and to write off the balance.

The CVA ensures that the amounts owed to the unsecured creditors are legally frozen, thereby allowing you to concentrate on moving the company forward. Even if you have already been threatened or served a winding up petition against your business, then you still have time to set up a CVA if you act fast.

I will be there at the Silverlake Stadium on Saturday 9th January cheering on the mighty spitfires as the last non-league team in the FA Cup. Hopefully the current problems being faced by Bolton will have an influence on the players and we could be in with a good chance of progressing through to the next round.

Share this article with others…

  • Del.icio.us
  • Digg
  • LinkedIn
  • StumbleUpon
  • Technorati
  • Google+


Open Help Desk

Live Help Desk

Helpdesk is currently offline, please arrange a callback below

Preferred Contact Method:
- or -

Please let us know the nature of your enquiry and the best time to contact you