Posts Tagged ‘Examinership’

Examinership (October 2009)

February 13, 2010 Leave a comment

Article from Shamrock Rovers match day programme against Drogheda and Cork (October 2009)

In the space of four days Shamrock Rovers have a double header of games playing first against Drogheda United and then against Cork City.  During the past four years, all three clubs have entered Examinership with the High Court deciding should the clubs go out of business or continue as a going concern.  All the clubs had run up significant debt and sought High Court protection from their creditors who were owed sizeable amounts of money including the Revenue Commissioners who were owed a combined total in excess of 1.5 million euro.  Hughes Blake was the accounting firm appointed as Examiners for all the clubs.

Examinership allows court protection from creditors for typically 100 days.  With High Court approval a large proportion of that debt is written off and a plan put in place to pay creditors and for the future financial viability of the club.  As we have seen in the last month, companies may not get approval to even get an examiner appointed (e.g. Liam Carroll’s Zoe Development companies) and even if they do, they don’t always survive going into Examinership (e.g. O’Brien’s Irish Sandwich Bars).  If an agreement can’t be made with creditors, then the company goes into liquidation with any assets sold off with preferential creditors like the Revenue Commissioners and employees getting paid first.

Shamrock Rovers were the first club to go through the process back in 2005.  With Rovers this season riding high at the top of the table, playing in front of full houses in Tallaght, the club is almost unrecognisable from that which went into Examinership and shows how far the club has come in such a short amount of time.

Under the previous club owners, Rovers’ debts had spiralled out of control with debts of around 2.5 million euro to a long list of creditors including players, the Department of Justice, the Gardaí and various companies who were owed money for services including portable toilets, first aid at matches, bus hire companies and training facility providers.  A laundrette won a case in court over money they were owed for washing the famous green and white hooped kit.  The largest debt was to Revenue at over half a million euro and this figure increased during the Examinership period when the club’s books were reviewed in detail.

Rovers were fortunate at this time that there was already a support structure in place, through the 400 Club, who were able to fund and run the club during Examinership while the Examiner went about trying to get a new owner and agreeing payment to the creditors.   Seven potential investors came forward to discuss taking over the club.  It was a different economic era in Ireland at the time and it seemed most were eyeing up the potential development opportunities with the Tallaght site.  However, these investors, when looking in greater detail, saw that they were not likely to make any profit on the site which now had a lapsed planning permission.  So it was the 400 club who were the last man standing and took control of the club post Examinership.  It was a club with a much different playing squad as all the players in the squad were made free agents with notable players like Pat McCourt (now at  Celtic) leaving for Derry and Dave Mooney (now at Norwich) joining Reading.  The wage bill was reduced by 1/3 down to 10 grand a week.

The creditor scheme at the end of the Examinership process saw Revenue write off a huge portion of money owed to them, preferential creditors receiving 4c for every euro owed and unsecured creditors, who were owed over a million euro in total, received about 2 per cent of that figure.  Players that were owed money received 2/3 of that owed to them.  Some former players who were due money decided to waive the amount owed.

Entering Examinership, Rovers had debts of 2.5 million euro and exited debt free having paid a significant six figure total as settlement.  Obviously clubs racking up huge debts in the vain attempt in hitting the Champions or Europa League jackpot isn’t exactly fair on other clubs who manage their finances prudently.  Therefore the League put in place rules that a club going into Examinership would be docked 10 points and both Drogheda United and Cork City received this sanction.  That season Rovers were docked eight points during Examinership but this was due to the fact that it emerged that the previous club owners got the club’s licence on the basis of misleading financial accounts.

Drogheda United’s troubles stemmed from the failed planning process on their proposed stadium in Meath.  They had debts of over 700,000 euro with half a million owed to Revenue when they went into Examinership but with a fire sale of players and their supporters raising 300,000 euro, the club avoided being wound up and kept their place in the Premier Division so that they are able to come to Tallaght this week to play what could be called an “Examinership derby”.

When Cork City went into Examinership last year, they had with debts of 1.3m euro with Revenue owed a quarter of that amount and their kit supplier owed 25,000 euro.  Once again Dave Mooney was on the move as part of an Examinership sale.  Cork received 400,000 euro from Reading for the former Rovers man.  However, even after successfully negotiating the Examinership process, much to the fans disgust the club last month was back in the High Court facing a winding up order put in place by Revenue.  In an incredible day in the Court, it seemed certain that another Cork club would go the way of Cork Athletic, Cork Alberts, Cork United, Cork Celtic etc.  It took the intervention of a benefactor who lent them 200,000 euro money to prevent Cork City going out of business.  However, despite the ruling, Cork City is still in some difficulty.  A friendly match against a Celtic selection was to bring much needed funds to the club but the expected full house didn’t materialise.  A low point was reached when the club nearly didn’t fulfil an away fixture against St. Patrick’s Athletic because the bus company hired wouldn’t leave Cork until their debts were paid.  The situation in Cork remains unresolved with club owner Tom Coughlan and fans group FORAS in disagreement as to what way the club should be run.

It is safe to say that based on evidence to date that Shamrock Rovers is a good example of how Examinership can work.  Rather than the club being liquidated, it is now an integral part of the Tallaght community bringing welcome money and good publicity to the South Dublin Country Council area.  Our club gives employment to playing squad of 23 players and back room team and the club generates a tidy tax amount for the public coffers.  The full houses in Tallaght all season have also generated large amounts of money for the exchequer.   It was a self confessed Bohemians fan in Justice Frank Clarke who presided over the Rovers Examinership case and his decision has meant that Rovers survived to play today and go head to head with Bohs for the 2009 League of Ireland title.