In the High Court today
Posted by John Beech on August 11, 2010
Surely a sign of the times – three League clubs faced winding-up petitions in the High Court today:
- Cardiff City
The HMRC petition was dismissed – the club has paid the debt of £1.3m (1). Court papers suggest that the club has had to borrow money to pay its summer debts (2).
- Sheffield Wednesday
A 28-day extension to the HMRC petition over a debt of £550,000 has been granted (3), the club having already made a “substantial repayment”, but further sums are now due. The attempts to sell the club are ongoing (4).
- Southend United
As predicted by Chairman Ron Martin, the debt of £140,000 has been paid to Charterhouse Commercial Finance, and the winding-up petition has therefore been dismissed (5). This follows the paying off of a debt to HMRC for £340,000 just over a week ago which had also been the subject of a winding-up petition (6).
These moves have been made possible as a result of what Chairman Ron describes as a partnership with Sainsburys (7). The Southend Echo offers a different take on the relationship with Sainsburys (8). It reveals that court documents indicate that Sainsburys were prepared to lend up to £5m to the club, and that, of this, only £1.8m has not already been borrowed.
For all three clubs then the immediate danger of Administration has been fought off. What is disturbing is that none of the three have managed to pay off their debts from internal resources, such as through the sale of assets. The mileage in a strategy of borrowing from Peter to pay Paul is limited, and none of the three clubs can really breathe freely.
The news that Craig Bellamy has joinedthe club on loan (A) has not been met with universal enthusiasm. With reports that Bellamy will be on a wage of £45,000 per week, Motherwell are not surprisingly aggrieved that they are still owed £175,000 for the transfer of Paul Quinn just over a year ago (B), and are considering a winding-up petition against Cardiff. At the time, Motherwell’s finances were far from healthy, in a CVA and with Equifax rating them insolvent (C).