Killies debt (NHC)

[Hibs07p]

http://www.sundaypost.com/news-views/scotland/critics-blast-kilmarnock-debt-write-off-plans-1.162896

Who's taking the hit, BOS or Johnston & Bowie? It's not too clear in the report.

GGTTH

[jonty]

hmmm. Partially owned british govt bank writes of £9m debt of football club. Uproar. Outrage.

Fully owned Lithuanian bank writes off £60m debt of football club. Is being actively encouraged to do so.

[lord bunberry]

So yet another club is going to be getting away with paying their debts, why are we bothering to pay ours. This sounds like administration light to me.

[Caversham Green]

http://www.sundaypost.com/news-views/scotland/critics-blast-kilmarnock-debt-write-off-plans-1.162896

Who's taking the hit, BOS or Johnston & Bowie? It's not too clear in the report.

GGTTH

You're right, it's not very clear. My guess would be that Johnston/Bowie would buy the debt from HBOS at a discount and then forgive a proportion of it. Both sides would take a hit, but how much each would suffer might never be known. It's pretty much what Mr Romanov did when he took over HoMFC, except that he didn't forgive any of it until it was clear he was never going to get it back anyway.

It is decidedly not at the expense of the taxpayer though. If the debt is impaired that means it was already included in HBOS losses from earlier years, and in any case this arrangement is undoubtedly more beneficial to HBOS than the alternative of administration.

It also keeps the yams rooted to the bottom of the league, so it's all good.

[MyJo]

The bank have very little chance of seeing this £9m paid back and administration of killie means they would get either zero or less than 1p in the £ through cva. It sounds like they are taking about £2m in settlement of this debt from Johnston and Bowie and are effectively selling the debt of the club to them, they are in turn responsible for this debt but are allowing killies new owners to pay back only the amount it cost to buy the debt from the bank.

The same thing happens everyday on a much smaller scale to individuals who have debts they cannot afford, the bank will accept a smaller settlement figure to satisfy some of the debt and get it off the books or if it's going nowhere fast it will be sold on to debt collection agencies for the same reason.

Standard practice but because of the figures involved and the fact it's a football club means it's attracting a lot more attention

[HFC 0-7]

Debts get sold off all the time, this is no different. The difference between this and hearts for example is that the bank will get a decent % of its debt back. This wouldnt have been a case that Killie have said we cant pay it and the bank has taken their word for it. Lloyds will know exactly whether they are in a position to be able to pay that debt off or not, they will know they cant and this deal means they will get something back rather than nothing.

Its either 2 million of the 9 million or zero of the 9 million.

The only issue people have is whether Killie will be punished or not and I would imagine they cant be punished, owners and investors right off debt in football clubs all the time.

[IWasThere2016]

You're right, it's not very clear. My guess would be that Johnston/Bowie would buy the debt from HBOS at a discount and then forgive a proportion of it. Both sides would take a hit, but how much each would suffer might never be known. It's pretty much what Mr Romanov did when he took over HoMFC, except that he didn't forgive any of it until it was clear he was never going to get it back anyway.

It is decidedly not at the expense of the taxpayer though. If the debt is impaired that means it was already included in HBOS losses from earlier years, and in any case this arrangement is undoubtedly more beneficial to HBOS than the alternative of administration.

It also keeps the yams rooted to the bottom of the league, so it's all good.

This is the case. J+B seeking to 'buy' debt for c. £1.5m - £2.0m

[BSEJVT]

This is the case. J+B seeking to 'buy' debt for c. £1.5m - £2.0m

To be honest its a great deal for everyone involved, with probably Johnston & Bowie getting the worst of it as they could have picked up from a CVA for much less.

As an earlier poster said the debt would have been classed by Lloyds as impaired and therefore any return would show as extra profit, improving situation for Bank and by extension shareholders.

My only hope is that Bowie gets the bigger shareholding from it and Johnston finally pisses off as Killie would be far better served without him

[Barney McGrew]

I take it they're 'seething' about this on fourteenpointsback?

[Ozyhibby]

It also means Killie will be unable to borrow for a long time. Next season should see the whole top league living within there means. A step in the right direction.

[Hibs07p]

You're right, it's not very clear. My guess would be that Johnston/Bowie would buy the debt from HBOS at a discount and then forgive a proportion of it. Both sides would take a hit, but how much each would suffer might never be known. It's pretty much what Mr Romanov did when he took over HoMFC, except that he didn't forgive any of it until it was clear he was never going to get it back anyway.

It is decidedly not at the expense of the taxpayer though. If the debt is impaired that means it was already included in HBOS losses from earlier years, and in any case this arrangement is undoubtedly more beneficial to HBOS than the alternative of administration.

It also keeps the yams rooted to the bottom of the league, so it's all good.

I'm sure I read elsewhere that BOS were getting "out" of football, so I wonder, are there other clubs with BOS that might be able to strike a similar deal? On a side note, anything that puts the Hear7s in jeopardy is got to be good.

GGTTH

[jacomo]

I take it they're 'seething' about this on fourteenpointsback?

If HMFC are cross they should just propose a similar deal.

If you assume they owe £25m to Lithuania, then an offer of £5.5m would represent a similar ratio. Seems fair.

[IWasThere2016]

To be honest its a great deal for everyone involved, with probably Johnston & Bowie getting the worst of it as they could have picked up from a CVA for much less.

As an earlier poster said the debt would have been classed by Lloyds as impaired and therefore any return would show as extra profit, improving situation for Bank and by extension shareholders.

My only hope is that Bowie gets the bigger shareholding from it and Johnston finally pisses off as Killie would be far better served without him

:agree: Whispers are Lloyds have made an impairment for all of this debt. I expect J&B know this now also.

[HKhibby]

So yet another club is going to be getting away with paying their debts, why are we bothering to pay ours. This sounds like administration light to me.

Yes you are probably completely right!, another football club getting away with this and that!...maybe because its the west of scotland?...not sure about that, been away for long time now so dont follow the politics on the west coat media mafia etc..etc... thing!, but would not surprise me!, but i will say one thing in the defence of Kilmanrnock...id rather they dont go into administration etc... if that is indeed the possible case, as it would mean a 15 point deduction....and i just want Hearts to suffer more and go down for the sheer miss management of financial affairs and the debt levels accumulated over the Lithuanian years! and not to mention yes the cheating and managing to avoid the relegation thing!

[Bronson]

Killie have never been big spenders so I don't really mind. Had they been spending money they never had on ridiculous wages like rangers and hearts, I would think it was scandalous they could just have that wiped.

It's only a good thing for Scottish football if the oldest clubs like killie survive.

[Just Alf]

Yes you are probably completely right!, another football club getting away with this and that!...maybe because its the west of scotland?...not sure about that, been away for long time now so dont follow the politics on the west coat media mafia etc..etc... thing!, but would not surprise me!, but i will say one thing in the defence of Kilmanrnock...id rather they dont go into administration etc... if that is indeed the possible case, as it would mean a 15 point deduction....and i just want Hearts to suffer more and go down for the sheer miss management of financial affairs and the debt levels accumulated over the Lithuanian years! and not to mention yes the cheating and managing to avoid the relegation thing!

I.... er.... I ....... agree! :greengrin

:thumbsup:

[Pete]

So this big, bad Michael Johnstone will turn a nine million debt into two, soften the terms and take a hit in the process.

If he pulls this off and they still continue their campaign against him they deserve everything they get. They should be giving him keys to the city as he's basically saved them from admin and all that might follow.

[hibees 7062]

I take it they're 'seething' about this on fourteenpointsback?

Raging :greengrin

[Barney McGrew]

Raging :greengrin

Excellent :faf:

[hibees 7062]

Excellent :faf:

Its no fair @gdown:

[Leith Green]

The bank have very little chance of seeing this £9m paid back and administration of killie means they would get either zero or less than 1p in the £ through cva. It sounds like they are taking about £2m in settlement of this debt from Johnston and Bowie and are effectively selling the debt of the club to them, they are in turn responsible for this debt but are allowing killies new owners to pay back only the amount it cost to buy the debt from the bank.

The same thing happens everyday on a much smaller scale to individuals who have debts they cannot afford, the bank will accept a smaller settlement figure to satisfy some of the debt and get it off the books or if it's going nowhere fast it will be sold on to debt collection agencies for the same reason.

Standard practice but because of the figures involved and the fact it's a football club means it's attracting a lot more attention




Im going to ask for a 9000 bank loan tomorrow, then in 3 yrs time having not paid a penny back, im gonna offer them 2000...

[Killiehibbie]

Im going to ask for a 9000 bank loan tomorrow, then in 3 yrs time having not paid a penny back, im gonna offer them 2000...Think big go for 90,000.

[MyJo]

Im going to ask for a 9000 bank loan tomorrow, then in 3 yrs time having not paid a penny back, im gonna offer them 2000...

Go for it. I hope your not too attached to your credit profile though :greengrin

[mutley]

Mixed emotions on sickbag about this. A few saying meh let them get on with it, none of our business etc..... However one comment made me chortle " it should be a point deductible offence, it's a CVA in all but name" Haha some of them still hoping killie loose points to keep them up

[Ozyhibby]

Im going to ask for a 9000 bank loan tomorrow, then in 3 yrs time having not paid a penny back, im gonna offer them 2000...

And they will take it. It happens all the time. You won't be able to borrow again for at least 6 years though.
Hearts can't complain as they had two such debt right offs a couple of years ago but did not learn from it and kept spending like a drunken sailor on shore leave.

[Jack]

Was this money not about the same as they 'invested' in their hotel?

[Dibben]

I really hope that they prolong it long enough to go into Admin after the season ends...

Now that would be worth reading about on fifteenpointsback

[vanNISHtelroy]

Don't like how this sounds to be honest, but as it could mean the survival of the club then it is something which would put up with!

The main downside of this is it means we could be stuck with MJ forever.

He still won't be putting in a penny so maybe Bowie will have a sharholding 1.5 - 2 million times bigger than MJ.

The debt has been reduced from approx £12m to £9m (almost completely through MJ asset stripping) and in that time the bank have received approx £5 million in interest on the debt, they feel that they have little chance of getting the remainder and feel they they should get the best deal they can.

Not sure if it will happen but it might be interesting!

[Tyler Durden]

Don't like how this sounds to be honest, but as it could mean the survival of the club then it is something which would put up with!

The main downside of this is it means we could be stuck with MJ forever.

He still won't be putting in a penny so maybe Bowie will have a sharholding 1.5 - 2 million times bigger than MJ.

The debt has been reduced from approx £12m to £9m (almost completely through MJ asset stripping) and in that time the bank have received approx £5 million in interest on the debt, they feel that they have little chance of getting the remainder and feel they they should get the best deal they can.

Not sure if it will happen but it might be interesting!

Always interested to hear your view on Killie matters but not sure this makes sense.

It's not asset stripping if it's used for debt reduction - has Johnston benefitted in some other way?

And what period are you referring to as the interest figures quoted don't stack up for a £10-12m debt?

[vanNISHtelroy]

Sorry asset stripping was probably the wrong term, what I meant was that he reduced the debt but by selling players, land etc rather than trading out of it through small amounts each season. He hasn't benefitted from that other than than ~£100k that he takes a season.

As far as I remember, and there is as always a great chance I am wrong, the interest that MJ had quoted as having been paid was over his tenure with Killie and the end of Jamie Moffat's so possibly over the course of ten years.

[Tyler Durden]

That sounds more plausible then, 5%.

Playing devils advocate I suppose that Johnston would claim sale of players and land is trading!

I don't know much of the background so not clear why the man is so reviled. Back to the original story though, it's the best deal for all parties.

[tamig]

That sounds more plausible then, 5%.

Playing devils advocate I suppose that Johnston would claim sale of players and land is trading!

I don't know much of the background so not clear why the man is so reviled. Back to the original story though, it's the best deal for all parties.

Indeed. And it's what any well run club - like us - would do :wink:

[vanNISHtelroy]

That sounds more plausible then, 5%.

Playing devils advocate I suppose that Johnston would claim sale of players and land is trading!

I don't know much of the background so not clear why the man is so reviled. Back to the original story though, it's the best deal for all parties.

Yeah understand what you mean!

Just the slight problem of no longer having bits of carpark or other land to sell, and theres no Naisy etc to sell for reasonable money any more.