Ex Salford Reds directors waive £1.5m in debt deal
JOHN Wilkinson and other former directors of Salford City Reds have agreed to forego loan repayments worth £1.5m as part of a debt deal.
The Super League club’s biggest single creditor Salford City Council, which is owed £1.5m, will get its money but may have to wait some time.
Under the terms of a company voluntary arrangement (CVA) agreed last week to deal with total debts of £4.5m, it will receive 16% over the next five years. The remainder will come an unspecified time after that.
This part of the agreement between new owner Marwan Koukash and the council was not detailed in the CVA and the council had not responded to an inquiry from TheBusinessDesk.com about the repayment timeframe at the time of publication.
The club was facing extinction in January when Mr Koukash, a racehorse owner, agreed to take it on. He also agreed to pay creditors in full – a condition stipulated by the sport’s governing body the Rugby Football League.
This is being done through the club’s old corporate entity, Salford Football Club Company 1914, which has gone through the CVA. Bolton-based Ideal Corporate Solutions, which handled the process, said this would allow Mr Koukash to deal with inherited debts without compromising investment in the club.
The CVA divided creditors into three categories with preference given to trade creditors owed £1m. This category, whose members will be repaid in full over five years, includes several players and the Cheshire management consultant Steuer Gregsson who all filed winding-up petitions against the club last year.
The next group includes Salford City Council and Peel Group, which is owed £372,000, who will only get part of the money within five years. A further £82,000 is owed to the stadium company, a joint venture between Peel and the council. The third category includes former directors such as Ian Watson, Howard Clegg and chairman and former owner John Wilkinson, who all agreed to waive debts of £1.5m.
The CVA’s supervisor, Andrew Rosler of Ideal Corporate Solutions, said: “The new owner used a CVA because he wanted to invest in the club’s infrastructure and players, rather than paying off old liabilities.”
He added: “Without the deal it would’ve been wound up by now and no one would’ve received anything. It would have disappeared.”
The club is now owned by a new company called Salford City Reds (2013) which in turn is owned by MKAC Investment Partners whose sole shareholder is Mr Koukash. The old corporate entity, Salford Football Club Company 1914, was the subject of a long-running winding-up petition which was dismissed in Manchester on March 18.
