Pivotal day in future of crisis club

Q: What is today's deadline?

A: Administrators Wilson Field have set today as the deadline for firm offers from interested parties. At least one such bid is already on the table and two other would-be owners are expected to put forward an offer. Any bid will have to be accompanied by proof of funding - in other words, evidence that the bidder has the funds needed to meet the price offered.

Q: Does that mean no further bids will be allowed?

A: No. If a better bid is tabled after today the administrator is obligated to consider it. At least one interested party - mystery businessman Ted Forster - has said he will not be ready to make a final offer today.

Q: What about the club's statement of affairs?

A: If the directors cannot produce a statement, they will be in breach of their legal obligations.

The Insolvency Act 1986 states that the directors of an insolvent company must produce at the creditors' meeting a sworn Statement of Affairs and a list of the insolvent company's creditors. The Statement of Affairs is usually compiled with the assistance of a suitably experienced insolvency accountant, and presented with a report detailing the cause of the insolvency.

The document, which sets out a company's assets and liabilities, is already late. It should have been produced by the middle of January.

If it is not produced, the administrator is likely to mention the fact in his report on the conduct of directors when it is submitted to the Department of Trade.

Administrators hold differing views over the importance of a Statement of Affairs. In Darlington's case, Wilson Field says the lack of such a document is more a matter of timing than a serious problem.

However, it is an offence under paragraph 48(4) of Schedule B1 of the Insolvency Act 1986 if a company fails to submit a Statement of Affairs without a reasonable excuse. This can lead to a fine and a daily default fine to be imposed by the court, on conviction for such an offence. There is no limit on the fine which may be imposed on conviction at crown court. The maximum fine on conviction in a magistrates' court is £5,000. In both cases, a fine of £500 per day may also be imposed.

Under Schedule 1 of the Company Directors Disqualification Act 1986, failure to submit a Statement of Affairs or to co-operate with the administrator under section 235 of the Insolvency Act 1986 are matters that may be taken into account by the court in determining whether a person is unfit to be an officer of or to be involved in the management of a company.

Unfit conduct may result in a disqualification under the Company Directors Disqualification Act 1986.

Q: So what happens now?

A: Bids for the club will be examined by agents based in Leeds. They will submit a report to the administrator, listing the advantages and disadvantages. They may also make a recommendation as to which bid is the strongest. Administrator David Field will make his decision based on the report and the facts at his disposal. He will then give a minimum of 16 days notice of a creditors' meeting at which they will consider the offer.

Q: Can George Reynolds torpedo any deal he doesn't like?

A: Yes. As the major unsecured creditor, Mr Reynolds can effectively veto a deal if he isn't ready to accept the figure any would-be owner is prepared to pay.

He could also favour one bid over another by agreeing to accept a lower amount for the cash he says he is owed from one group but not another.

However, he must weigh up the pros of holding out for a better deal against the cons of what would happen if the club goes into liquidation.

Q: What happens if the creditors agree to a deal?

A: They get paid, the Quakers have a new owner and the club comes out of administration with a bright future ahead.

Q: And if they don't?

A: Then the administrator has two alternatives, neither of them palatable to fans of the football club. He may seek to realise the company's assets as if the company were in liquidation. This could mean the Reynolds Arena would be sold to a local non-league club.

The other alternative is to liquidate the company. The business will be broken up and sold off to the highest bidder. The stadium could be sold, or even stripped and demolished.

Once the costs of the administration are covered, any money left over will go firstly to secured creditors, then preferential creditors (ie. employees who are owed wages) and finally unsecured creditors.

Q: How long can the club continue as it is?

A: The administrator says the club will survive until the end of the season provided attendance holds up. In order to cover the wages, the Quakers need good gates at home matches as they receive nothing from away fixtures.

Giving power back to the fans

LED by lifelong supporter Mark Meynell, a consortium of local businessmen was, certainly until recently, seen as the main contender to take control at the Reynolds Arena.

The group is made up of four local business figures and headed by Northallerton-born Mr Meynell, who is already an associate director of the Quakers.

The consortium went public with its interest on January 6, revealing that the key element of any bid would be involving fans in running and owning the Quakers.

To that end, an offer was made to Darlington Supporters' Trust to become one of five equal partners and shareholders.

The trust has thrown its weight behind the consortium, with the ultimate aim of achieving supporter representation on the club board.

The identities of other consortium members have been kept under wraps - a source of frustration to some fans, but essential while a detailed business plan was being drawn up, according to the group.

Mr Meynell, 48, has been the public face of the consortium, dealing with the media, while behind-the-scenes discussions with administrators, the borough council and local firms have taken place.

He is the managing director of Shropshire-based Lloyds Animal Feeds, a firm also involved with Seedco Limited, based at Piercebridge, near Darlington.

The consortium's bid has been based on a painstaking feasibility study, aided by the trust's investigations into the finances of Darlington Football Club, long before administrators were called in.

Money would be borrowed, by way of a mortgage on the stadium, but members are satisfied that they have so far put a solid financial package together.

For its part, the trust has launched a fundraising appeal, with the target of reaching £250,000 by the end of next month.

If the consortium's bid is ultimately defeated, the trust has stated a desire to work with whoever the new owner may be, to help bring the club back to its roots and closer to the community.

Dublin tycoon

IRISH tycoon Des Kelly has caused the biggest stir of the Quakers saga so far, controversially announcing that he would replace David Hodgson if his bid were successful.

The revelation that Mr Kelly would give the manager's hot-seat to ex-Carlisle United boss Roddy Collins sparked outrage among Darlington fans.

Their interest was first revealed on a Dublin radio station this week, when Mr Collins said he would "look forward to the challenge" of trying to save Darlington from relegation.

His declaration over the airwaves infuriated Mr Hodgson, who responded tongue-in-cheek: "I'm hugely impressed with his record at Carlisle United, so I believe he'd be a big boost to our football club."

That was a reference to Mr Collins' sacking by the Cumbrians last year after a dismal start to the season left them rock bottom of the Third Division.

But, undeterred by the local response to their plans, the Irish contingent flew into the North-East on Wednesday for talks with the Quakers' administrators.

Mr Kelly, managing director of Des Kelly Carpets, is thought to have been joined by Mr Collins and fellow carpet firm boss Noel Furlong.

Last year, the Des Kelly Carpets chain announced that its profits before tax, across 12 stores, had increased by 40 per cent to the end of April 2002. The company had a gross profit of 6.6m euros, up 300,000 euros on 2001.

Accounts filed with Companies Office showed the chain carrying forward a retained profit at the end of April 2002 of 1.9m euros.

Separate accounts were filed for Des Kelly Carpets in Sallynoggin, in Dublin, showing that profits there were also up.

Mr Collins made his name at Dublin team Bohemians, leading them to their first League of Ireland and Irish Cup double in more than 70 years.

The club is now sponsored to the tune of £100,000 by Des Kelly Carpets.

Will Rhodes lead to power?

THE mystery man in Rhodes, Ted Forster, has mainly made his interest known to Quakers' fans via Internet message boards.

His posts, boldly declaring that he wanted to come to the rescue of his beloved club, were initially met with a considerable amount of scepticism.

The thoughts of many fans turned to an embarrassing incident from football's not-too-distant past, which saw an unemployed former curry house barman unveiled as the saviour of Carlisle United.

Mr Forster's bizarre move in addressing die-hard fans directly on the Internet brought criticism and respect in equal measure.

Some considered it an unusual way of going about a complex business deal, while other interested parties were playing their cards so close to their chest.

Others have admired his openness in keeping supporters up to date with his discussions with the administrators and former chairman George Reynolds.

And his supporters had something to celebrate yesterday, when he backed up his words with actions and faxed the first formal bid for Darlington FC from his home on the Greek island.

"I have spent something like eight hours a day on the Internet, for the last four or five days, working on this," he said.

Mr Forster acknowledged there would be doubts about whether his interest was genuine. "There has been scepticism - what can I do about it?" he said.

"Some of the older fans have been quizzing me and I have given them quite graphic details of the game against Chelsea (in the 1958 FA Cup) and others."

Darlington Supporters' Trust and the consortium it is connected to have made contact with Mr Forster, explaining their position.

He said of the trust: "They know exactly where I stand and I know where they stand."

Mr Forster says he had successful businesses in the Midlands and has offered financial backing to several non-league clubs, including Corby Town.

The key question: How big is the club's debt?

The scale of Darlington FC's debts are critical to finding a new owner but the precise amount owed to former chairman George Reynolds remains clouded in uncertainty. This is what we know:

Q: How much does Darlington FC owe?

A: The creditors are split between secured and unsecured.

Secured creditors are at the top of the ladder. In Darlington's case, they are the financiers, known as the Sterling Consortium, and they have a legal right or charge over the Reynolds Arena. The Sterling Consortium - led by finance experts Melvyn Laughton, Sean Verity and Stewart Davies - loaned the Quakers money to finish the Reynolds Arena, the 27,000- seater stadium named after chairman George Reynolds, on which they have a mortgage.

This means Sterling will have to be satisfied in full - or to its satisfaction - before any would-be white knight can take over.

With Sterling's loan accumulating 15 per cent interest, administrators believe the final figure will be about £5m.

Unsecured creditors now include the Inland Revenue, HM Customs and Excise for VAT, trade creditors and George Reynolds.

Unsecured creditors will be offered a deal (usually expressed as an amount for each pound owed) as part of any rescue. This can vary depending on the generosity of the would-be buyer.

In the past, unsecured creditors of football clubs have accepted offers as low as 10p in the pound. On that basis, someone owed £10,000 would get just £1,000.

There are 169 unsecured creditors who, between them, are owed £2,094,657.58, although the administrators believe that as the picture at the club becomes clearer, this will be reduced to about £1.5m.

Q: How much is George Reynolds owed?

A: The last accounts signed by the club's auditors for 2002 show that Mr Reynolds was owed £5.6m. No further company accounts have been filed.

However, Mr Reynolds recently submitted a second statement indicating that he is owed a further £14m on top of the £5.6m, although this amount has not been audited. It is up to Mr Reynolds to provide proof to verify his claim.

Q: Who is owed cash?

A: The biggest unsecured creditors are "the taxman", who wants £461,000, and "the VAT-man", who is after £241,000. The smallest creditor is a plumbing firm in Darlington, which is owed 3p.

Durham Police are owed £42,000 for their matchday attendance, and the St John Ambulance has £3,040 outstanding. This is believed to be the most the charity has ever been owed following the collapse of a football club.

Sunderland FC is owed £5,000 and Blackburn Rovers FC £2,600, while Darlington's landlord at Feethams, the cricket club, is owed nearly £9,000. Darlington's former goalkeeper Mark Prudhoe is owed £390, believed to be for coaching fees, but the K Kyle of Bowburn who is owed £950 is understood not to be the Sunderland centre forward Kevin, but a flooring contractor.