Melbourne Rebels 2024

[RugbyReg]

7.1. Directors’ explanation for the Company’s difficulties Mr Stone has provided the following reasons for the Company’s financial difficulties:  That the Company was at all times effectively controlled by RA as a participating club in the SRPC;

 

[RugbyReg]

yikes.

8.1.1. Unfair Preferences

My initial investigations have identified that the Company made payments totaling $671k to four creditors in the six month-period prior to my appointment which appear to be preferential in nature. These transactions would be further investigated in the event that a Liquidator is appointed. Creditors should note than in order for a payment to be preferential in nature, a liquidator must prove, amongst other things, that a company was insolvent at the time the payment was made. I do not consider this would be an issue for these claims and I consider that the prospects of recovery would be high.

8.1.2. Unreasonable director-related transactions

An unreasonable director-related transaction is one that is entered into with a director or close associate of a director where it may be expected that a reasonable person in the company’s circumstances would not have entered into the transaction having regard to the benefits and/or detriments to the company. My investigations have identified payments being made to two directors and a related entity of a director in the six month period prior to my appointment totalling $239k which I consider are unreasonable director-related transactions. It is possible upon further investigation that these transactions could also be claimed as unfair preference payments if a valid defence is made against this specific type of claim. These transactions would be further investigated in the event that a Liquidator is appointed.

 

[RugbyReg]

I mean read it yourself but its fascinating and scary reading. I can only assume they are not the only rugby organisation in Australia being run so poorly.

Company directors have a duty to prevent insolvent trading by not incurring debt when there are reasonable grounds for suspecting that the company is or will be unable to pay its debts as and when they fall due.

The objective test or standard of measure in deciding whether insolvent trading has occurred is whether a director can demonstrate that their actions are at the same degree and level that would be required of an ordinary reasonable person holding a similar position and responsibility in the same circumstances.

A director who fails to prevent a company from incurring a debt at a time when there are reasonable grounds for suspecting that the company is insolvent, or will become insolvent by incurring that debt, contravenes s588G of the Act.

I refer to my earlier comments above that I consider that the Company was insolvent from at least 31 December 2018. An insolvent trading claim against the Directors would comprise any debt that was incurred after 31 December 2018 and remains unpaid.

Whilst a detailed analysis has yet to be undertaken to quantify the exact loss and damage claim, I consider it reasonable considering the date of insolvency is over five years prior to my appointment to assume that the majority, if not all, of the debt that remains unpaid would have been incurred after the date of insolvency.

Accordingly, an insolvent trading claim against the Directors could exceed $16.8m (being the value of the known creditors less related party claims).

 

[Wilson]

This part just seems crazy if the new entity actually want to keep the Rebels going:

What’s more, if creditors accepted the DOCA proposal put forward by the directors, the “Investor Group” would provide funding to pursue the $8.5 million in legal claims against RA, thus potentially generating an additional return.

“Litigation funders generally require a significant share of the proceeds of any judgement as a condition of funding the litigation. In the Deed scenario, the Deed Proponents will provide funding to pursue the RA claims without the requirement to pay a funding premium to litigation funders in event that the deed administrators consider there is a commercial benefit in pursuing these claims.”

They're basically asking RA to sign off on the Rebels continued participation so that they can fund a lawsuit against RA. I understand using the threat of that suit against RA, but put like this it's in RA's best interest to say goodbye to the Rebels and leave them the harder path of relying on litigation funding. Surely if you were the investor group backing the Rebels you'd offer to settle those claims on the basis of getting the super rugby license back?

 

[swingpass]

this is the reality isnt it. catch 22, in order to be successful all (not just Rebels) need to pay over the odds wages to get and retain playing staff, the outgoings, in Melb and probably also Canberra, Sydney ? far outweigh the income. for a team like the Rebels who have a poor on field record, meaning less sponsorship dollars and gate receipts its a no win situation. the Rebel plan i assume was to try and buy onfield success, parlay that off against an increased income stream and the promised RA dollars from PE (which never eventuated). i posted above about one of the NZ franchises also posting > NZD 1 million loss last year. MRRU probably have a point, they are contracted to provide a team, obligated to pay the wages and then given insufficient funding to do so, yes i know all the other franchises are the same, but Waratahs and Reds have both been in the $$poo previously, Brumbies sold off their assets to cover shortfall and the Force have Twiggy (but for how long). As many have been saying the Super format no longer works, doesn't generate enough interest to generate sufficient $$ from TV, sponsors and gate receipts. We will see what happens but i still suspect no Rebels in 2025 and no full-time professional rugby in Australia by 2030.

 

[dru]

This part just seems crazy if the new entity actually want to keep the Rebels going:


They're basic asking RA to sign off on the Rebels continued participation so that they can fund a lawsuit against RA. I understand using the threat of that suit against RA, but put like this it's in RA's best interest to say goodbye to the Rebels and leave them the harder path of relying on litigation funding. Surely if you were the investor group backing the Rebels you'd offer to settle those claims on the basis of getting the super rugby license back?

Just bizarre. While my support for RA is begrudging and my desire to see not just a 5th team but a team in Melbourne is paramount, as a fan I expect RA to reject this out of hand. Go away Rebel directors and return with some basic common sense.

 

[KevinO]

From what I have read this deal would mean Rebels directors walk away from everything, the lawsuit is the new owners chasing missed payments by RA to help with the future.

Old board, is done. New board will be appointed.

 

[Brumby Runner]

While it it important and very desirable for the Rebels to survive, we should remember that any win against RA will ultimately be at further cost to the other franchises. I hope the Rebels find a way to remain but not where the cost is borne by the Brumbies et al putting their futures even more in doubt.

 

[KevinO]

I think RA is afraid of that lawsuit as it would open up the other 4 franchise getting the same back. Including the Brumbies

 

[RugbyReg]

official release by RA. Wow.

Rugby Australia (RA) acknowledges the findings of the Administrator’s report regarding Melbourne Rebels Rugby Union Pty Ltd (Administrator Appointed) (MRRU) issued to the company’s creditors.

RA continues to solely fund and operate the Melbourne Rebels Club and its teams to ensure participation in the 2024 competitions. We have done so since the company was placed into Voluntary Administration (VA) by its former board of directors in January.

For clarity, RA remains a creditor of the MRRU. We also welcome the positive news that MRRU employees are to receive full payment of their entitlements under the proposed Deed of Company Arrangement (DOCA).

RA notes the public statement made by the former directors of MRRU in response to the Administrator’s report. The Administrator has not made comment on the strength of the claims of the former directors of MRRU and has attributed no value to those claims.

The Administrator’s report suggests that MRRU and its former directors have been trading whilst insolvent since at least 2018. Given the seriousness of the conduct of the MRRU directors, the Administrator has made a report to ASIC.

RA notes Section 7.2 of the report specifically states that MRRU’s financial difficulties are not due to RA’s lack of funding, but rather MRRU’s trading losses, lack of alternative funding, excessive costs and insufficient non-RA revenues.

RA has complied with all its contractual obligations to MRRU. This includes the payment of all funding (which is subject to an agreement signed under authority by two MRRU directors on behalf of the MRRU Board) and also paying all applicable PAYG amounts to MRRU, who misused these funds and did not pay them to the ATO, which was the intended purpose.

RA maintains that the true financial state of MRRU has not been disclosed to RA for some time – it was only once the company defaulted on its payment plan with the ATO last December that RA was made aware of the full state of the MRRU situation.

In addition, RA has not been advised by the former MRRU directors that they are subject to Director Penalty Notices from the ATO.

Despite multiple requests from RA, the MRRU directors have failed to provide any viable proposal or business plan regarding the future of the Melbourne Rebels.

Contrary to the former directors’ statement, RA met with the former directors at their request in March to discuss a potential resolution. Despite RA’s request for a proposal, no fully-formed proposal was provided by the group.

RA remains committed to Rugby in Victoria, and will continue to actively consult with relevant stakeholders, as well as our legal and financial advisors regarding next steps. We will confirm our position on the future of the Melbourne Rebels Club in due course.

 

[LeCheese]

official release by RA. Wow.

Real 'this means war' vibe to a few of those points

 

[dru]

From what I have read this deal would mean Rebels directors walk away from everything, the lawsuit is the new owners chasing missed payments by RA to help with the future.

Old board, is done. New board will be appointed.

So the new directors propose RA grant them a license in order that they can pursue legal action against the RA. That is somehow meant to be better than the old directors pursuing RA?

It's absurd. The thought that RA will sign off on it is simply ridiculous.

 

[Jimmy_Crouch]

Real 'this means war' vibe to a few of those points

More we aren't going to take you continually sh*t talking us.

 

[Slim 293]

Likely trading insolvent since 2018…

Sooooooo, it’s not Covid’s fault?

 

[Strewthcobber]

I hadn't realised Leigh Clifford, who is leading this Investment Group is the father of Georgia Widdup, Melbourne Rebels Director

From what I have read this deal would mean Rebels directors walk away from everything, the lawsuit is the new owners chasing missed payments by RA to help with the future.

Old board, is done. New board will be appointed.

The proposed DOCA lists the current board of directors

Directors means Georgia Widdup, Neil Hay, Gary Gray, LyndseyC attermole, Tim North, Owain Stone and Paul Docherty

And in section 11 of the deed.......

On the Effective Date, control and management of the Company will return to the Directors.

If the deed is agreed to, the current directors would return to that role

 

[half]

Are the investors referred to, the same as the investors who are building a 15k stadium in west Melbourne.

 

[Marce]

As many have been saying the Super format no longer works, doesn't generate enough interest to generate sufficient $$ from TV, sponsors and gate receipts. We will see what happens but i still suspect no Rebels in 2025 and no full-time professional rugby in Australia by 2030.

And Super Rugby wants to add an Argie team from 2026. A team based 12,000 kilometers away. They have no idea how to run a proper competition like the AFL or NRL.

If you undid South African teams due travel costs, time zone and other things. Why do you want to expand a business that isn't working???

 

[Strewthcobber]

Are the investors referred to, the same as the investors who are building a 15k stadium in west Melbourne.

It's not explicitly stated in the document who it is other than this

Investor Group means the Directors, Mr Leigh Clifford AC, and a group of high net worth individuals.

But it does seem very likely given the other reporting around this

 

[PhilClinton]

Likely trading insolvent since 2018…

Sooooooo, it’s not Covid’s fault?

Don't you understand. A couple of the Rebels board of directors are notable doctors.

They predicted COVID back in 2018 and started stockpiling funds owed to their creditors to ensure the club could continue to pay players, staff and have long lunches.

- a couple of posters on this forum, probably.

 

[Dctarget]

Not sure how they could have been insolvent for so long, that's pretty incredible. I'm surprised they could and did hide it for so long. Curious to see how they explain away this one.