DAVID RUBIN & PARTNERS’ administrators have lined up Otium Entertainment to rescue collapsed League 1 side Coventry City FC.
Stephen Katz and Paul Appleton, both partners at David Rubin & Partners, were appointed to the club on 21 March 2013.
Appleton has announced that he will now sell the club to Otium Entertainment because it was the highest bidder.
However, the club’s fans are unhappy with the administrators’ decision as Otium is registered to many of the directors who sit at SISU, the current parent company of Coventry City FC.
“I realise and appreciate the end result of the sale process will not necessarily be welcomed by a large number of Coventry fans,” Appleton told the BBC.
“However, the bid from Otium Entertainment Group Limited was substantially more than any of the other three bids received.”
In 2007, privately-owned hedge fund sponsor SISU Capital Limited bought Coventry City FC.
As part of the deal it inherited several contracts. Paramount was the club’s rental payments for its grounds Ricoh Arena. In 2005 the club moved to the larger stadium Ricoh at a cost of more than £1m per annum to the landlord Arena Coventry Limited (ACL).
However, unlike other clubs, Coventry is unable to make any money from the sale of food & beverage at the site, with those funds also going to ACL. The club’s parent company SISU subsequently tried to renegotiate the terms of this contract but no agreement was reached.
According to the administrators statement the landlords ACL were owed about £600,000 by January 2013.
The statement also highlighted that unsecured creditors are owed an estimated £69.7m, however, the majority of that debt is owed internally to other subsidiaries of SISU.
A hedge fund ARVO, also operated by SISU, is owed about 10.25m as a secured creditor.
The administrators’ fees, from their appointment on 21 March to 14 May, comes in at £163,294 for a total of 475.54 hours at an average charge out rate of £343 per hour.
All clubs that are part of the Football League and Premiership league must exit an administration via a Company Voluntary Arrangement (CVA).
This is a deal to repay creditors a percentage of debt over a contracted period of time. A CVA must be voted for by more than 75% of creditors, by value, in order for approval.
Clubs will usually transfer the assets of the club, such as player contracts, to a new company, (new co), with the original company (old co) entering liquidation. The new co will make the CVA payments to the creditors.
Accountancy Age understands that a decision from the Football League on the sale of the club is expected this week. The administrators hope to have the CVA deal completed before the start of the new season on 3 August – in order to avoid any further points deduction at the club for being in administration.
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