Warriors’ land deals could be overturned if they enter administration
Unexplained land deals undertaken by the owners of Worcester Warriors could be investigated and ultimately overturned if the Premiership rugby club goes into administration.
The West Midlands club’s hierarchy have confirmed talks with HMRC after receiving a winding-up petition over unpaid tax, amid fears that a team who finished 11th last season could go into administration this week.
But Worcester’s owners, Colin Goldring and Jason Whittingham, are also facing questions over deals to sell two plots of land – the Sixways Stadium car park and some training pitches. Goldring and Whittingham are also directors of the company that bought the car park for a reported sum of £50,000.
“Who knows, the car park could be a right of way, it could be a ransom strip. It might be £50,000 worth of land but it may be worth more if it turns off any buyer,” Danny Davis, partner at Mishcon de Reya LLP, told Morning Wire
“The timing of the deal with the car park looks worthy of investigation, theoretically, if the company enters liquidation or administration, and it would be pretty unusual to sell just that small parcel of land in the teeth of a winding-up petition.
“If administrators have issue with the timing of any of these asset purchases, they have the ability to investigate the transaction as to whether it’s either a transaction at undervalue [section 238 of the Insolvency Act], or a transaction in breach of the directors’ duties held towards the company.
“It is open to an administrator to say, ‘that’s a transaction that should be investigated’. It’s not uncommon to see these things get overturned.”
Worcester finally broke their silence on the club’s financial difficulties on Monday.
“Over the past week a lot of work has been done away from the media spotlight to try to navigate the club through the challenges that we currently face,” the club said in their first statement since responding to reports of their winding-up petition.
“That work continues, discussions are ongoing and we are reviewing the options available to the club.”
The Rugby Football Union board are in control of eventual punishments for clubs who fall into administration.
Ben Cisneros of Morgan Sports Law and the Rugby and the Law blog told Morning Wire:“If a club goes into administration or liquidation, this is classed as an ‘Insolvency Event’ under the RFU’s regulations.
“If the Insolvency Event happens during the season, the club will automatically be relegated at the end of the season. If it happens before the start of the coming season, the club will be subject to a 35 league point deduction and possibly also relegation.
“However, these sanctions may be disapplied in the event that it is deemed a ‘no fault’ insolvency event – which explicitly includes where the event has been caused by a pandemic.”
A spokesperson for Premiership Rugby said: “The RFU and Premiership Rugby have been made aware that a winding up petition has been filed by HMRC against Worcester Warriors.
“Premiership Rugby and the RFU have been in regular contact with Worcester Warriors shareholders and management.
“Both parties have supported the club through the financial challenges of the last few years.
“We appreciate that this is unsettling for the players, the employees, the fans, and the community in Worcester and we will continue to work with all stakeholders to establish the appropriate next steps.”