Darlington FC goes into administration (From The Northern Echo)

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Darlington FC goes into administration

11:35am Wednesday 25th February 2009 in News Photograph of the Author Exclusive By Nigel Burton

DARLINGTON Football Club will formally enter administration at 3pm this afternoon.

Official papers were signed at Recognition PR on the Lingfield Business Park.

The club's day-to-day affairs will now be handled by the administrator, Dave Clark, of Brackenbury, Clarke & Co, who will decide in the next few days whether the club can be saved.

Questions and answers: What is administration?

A legal procedure that allows a business in financial trouble to continue without being forced to sell off assets to pay debts.

Administration gives a club breathing space to restructure its finances and put its business on a sounder footing.

What's the difference between administration and receivership?

The big difference, as far as a club's fans are concerned,is that administration's legal purpose is "the survival of the company as a going concern".

Creditors usually prefer administration over a move directly to liquidation because there is a greater chance they will get their money back.

How does it happen?

A petition is made to a magistrates court by creditors or directors. In Darlington's case the George Houghton, the club's chairman, made the call.

Before an administration order is granted, the petitioners must convince the court that the club is unable to pay its debts The administrator, usually a named individual at an accountancy firm, is appointed by the court.

What does the administrator do?

He will take on the running of the club with the aim of getting the club's creditors their cash back.

Don't be fooled into thinking administration is soft option. An administrator is under a legal obligation to recover owed money and he will draw up a very tough method of doing so.

Usually this means job losses and asset sales.

And yes, players are regarded as assets.

What can the fans do?

There is no legal requirement for an administrator to take any notice of supporters' wishes.

Often, though, the administrator will try to work alongside fans groups, as happened when the Quakers last went into administration in 2003.

Can the club recover?

Yes - in theory. When the objectives of the administrator have been met the business can re-emerge.

A Creditors Voluntary Agreement can also be used to get a club out of administration.

This is a debt restructuring proposal from the club to its creditors, a private agreement to pay off some of the money owed at a certain, mutually satisfactory, level.

The club should then be left as a solvent entity, in charge of its own finances and able to trade on - but many of its assets may have gone.

Could the Quakers go out of business?

If restructuring is not successful, administrators will move to liquidate the company, selling off its assets to pay back creditors like banks and bondholders.

What about the points situation?

Any club entering administration will be docked ten points -- effectively, the Quakers promotions hopes are now doomed.

Comments(17)

Andyleigh says...
11:45am Wed 25 Feb 09

Good luck to the Quakers in their fight for survival.
The blame for their situation can be squarely laid at the door of George Reynolds and his ego, by saddling them with a huge stadium that there is no chance of filling, miles out of town.