Notts County And The Phantom Winding Up Petition

By on Feb 11, 2013 in Finance, Latest | 1 comment

It may have been one of the more curious winding up petitions that the High Court on The Strand will have dealt with today, at least. The petition against Notts County Football Club Ltd, which was brought, and there are no great surprises here, by HMRC, was reportedly dismissed in a matter of seconds this, but the fact that the club claims to have been unaware of any such proceedings even having been raised until they were tipped off by a supporter of Plymouth Argyle raises questions over the processes that are currently being used by the tax collectors in their apparently relentless pursuit of football clubs through the courts.

That there was an issue at all was first flagged up Friday night, when a Plymouth supporter sent an email to the club confirming that they were listed at The High Court for a winding up petition to be heard this morning. The club hastily arranged legal representation and put up an angry statement denying not only that it owed any tax money but also that it had not previously been made aware of these proceedings. By law, of course the defendant in any such proceedings has to notified of them, but there were further complications to add to these mysterious proceedings that further clouded the issue. Not only were the proceedings not listed on the official journal of record, the London Gazette, but notification of the court date would have had to have been sent by the court itself rather than by HMRC.

The standard procedure for issuing a winding up petition is quite straightforward. The creditor should issue a legal notice called a Statutory Demand to the debtor, giving twenty-one days for contact to be made, by paying in full, reaching a mutually amicable agreement to repay monies owed in instalments or by way of securing the debt over any assets held, usually property. If agreement cannot be reached or – somewhat more commonly – then a hearing for a winding up petition can be requested through the court. Service of the statutory demand is usually effected by hand service or, in the event that this is not possible, by recorded delivery post, and the issuers should normally retain ‘proof of service,’ which confirms that the papers served have been served and, often crucially, that they have been served to the right address. The court, of course, would serve papers to the address provided by the creditor.

In the case of Notts County, there should have been no issue regarding this service of papers. Notts County Football Club Ltd gives a registered address of Meadow Lane Stadium, Nottingham, and a trading address of Meadow Lane Wharf, Nottingham. Not much room for error there, although the trading address is separate from the stadium itself and seems to be based on over the road from the stadium itself. We don’t know to which address any paperwork either was or wasn’t sent, of course, merely that of all the possible things that could have gone wrong with this process, this degree of confusion with regard to addresses seems like the most likely culprit for whatever has been going on with regard to this petition over the last few weeks or so, although may be contradicted by the fact that no record of the petition was listed on the London Gazette.

The club’s response to all of this has been bullish, to say the least. A club statement issued last night through its official website stated that, “After investigation, it was found that this petition was being brought by Her Majesty’s Revenue & Customs (HMRC) for PAYE payable on Wednesday 19th December 2012,” and that, “The club can state, unequivocally, that the business is completely up to date with all VAT and PAYE monies and that this action is regarded by the Board as both disruptive and damaging,” while a further statement issued this morning confirmed that, “The petition was dismissed in a matter of seconds at a hearing in London on Monday morning.” It certainly seems reasonable that all concerned should explain to the club exactly how this set of circumstances came about, but this doesn’t mean that the club’s financial position is completely rosy at the moment.

The club’s last published accounts listed assets totalling £1,227,820 and total liabilities of £3,791,686, debts of £2,886,921 due to creditors whilst the club is owed £706,164 – not a position that we could reasonably describe as being in the rudest of health, even if such levels of debt are a familiar enough story at the level of the game at which the club plays. A recent post on a Notts County forum by somebody claiming that they were chairman Ray Trew – and it is worth pointing out that it isn’t even known for certain that it was Trew saying this or somebody masquerading as him – stated that, “On a personal level i am not prepared to increase that sum and the only way i will inject further monies into the club is in the form of loans and if i am being totally honest I am not motivated to even do that currently because i am not being supported by you the fan base,” and lower attendances this season have had a knock-on effect on the club’s ability to spend due to newly-introduced Salary Cost Management Protocol (SCMP) rules.

Regardless of whether it was Trew that wrote all of this, the local press picked up on it fairly quickly and, with the team sitting in mid-table in League One, with Trew saying (in an echo of the comments made on the club’s forum, which would lead us to believe that it was him posting on there a couple of weeks earlier), ‘Recent displays have not lived up to expectations and our poor disciplinary record has only further hampered our progress,’ Keith Curle was sacked as the club’s manager. Notts stay in a mid-table position in League One, with falling attendances being, perhaps, a reflection of the continuing straitened times in which we live more than anything else. There was a time not so long ago when it looked as if the oldest professional football club in the world may no longer be with us, but Notts County still is and, after the fraudulent mismanagement of the Munto Finance era, that is, perhaps, something for Notts County supporters to be grateful for. And if Ray Trew is paying his tax bills on time and keeping the club within the new financial constraints imposed upon it by the Football League as a result of the chronic mismanagement at a number of different clubs down the years, then Notts County supporters should be able to rest at ease that winding up petitions raised against the club should continue to be more winding up than petition.

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    1 Comment

  1. The service of a statutory demand is not the only way a petitioning creditor can prove that the debtor company is insolvent. The undoubted existence of a debt and its non payment is usually sufficient.

    It is possible that Notts County owed the PAYE as at 19 December and was late in paying it. HMRC then issue its petition, which should be served on Notts County, but before it is served Notts County pay its debt. HMRC decide not to serve or advertise the petition, but to ask for it to be dismissed on the date given for the hearing when the petition was issued.

    This theory seems to fit all the known facts.

    Ron Ipstone

    February 13, 2013

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  1. The Lower League Week - Impossible to Predict | Born Offside - [...] fan who saw their name listed and, surprised at having seen no media coverage of the process, contacted the …

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