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The full extent of the Jersey Reds' dire financial situation has been revealed after creditors met yesterday – including almost £1.5m in unpaid loans, a tax bill of over £500,000, and the possibility that another £400,000 of public money will be used to pay back a bank loan.
The company's statement of affairs – handed out to creditors at yesterday's meeting – showed that the club's assets were estimated to be worth around £142,714.
However, the company has debts of more than £3.1million – relating to everything from unpaid wages to equipment and a hefty amount of tax owed to Government.
The largest debt for the Jersey Rugby Football Club (2016) Trading Limited is a loan from Jersey Reds (2022) Limited totalling £925,195.
Pictured: The company's statement of affairs as of 23 October 2023 shows that they have assets worth around £143k – but debts of over £3.1m.
Jersey Reds (2022) Limited is a separate company which was set up in 2022 "to separate the professional rugby team from the amateur rugby club for the benefit and protection of both the Company [Jersey Rugby Football Club (2016) Trading Limited] and the JRFC".
However, in the statement of affairs published yesterday, an affidavit signed by Brian Morris, Director of Jersey Rugby Football Club (2016) Trading Limited, explained that certain clauses within the operating agreement were not agreed.
Pictured: An extract of an affidavit signed by Brian Morris, Director of Jersey Rugby Football Club (2016) Trading Limited, explains that the companies were never fully split as planned.
This means that the two companies never fully separated as planned.
The Jersey Rugby Football Club also owes £522,040 in GST, ITIS and Social Security payments.
This debt which was re-profiled by the Government earlier this year to allow the club to repay it over 36 months rather than 12 months.
The statement also confirms that "additional liabilities relating to employees may be due" for further GST, ITIS and Social Security payments which are "yet to be quantified".
Pictured: At the beginning of October, Ministers produced a report outlining funding provided to the Jersey Reds in previous years – which also referenced the re-profiling of the Reds' ITIS debt.
There is an additional £18,709 owed to the Government which is not included in the GST, ITIS and Social Security debt. Following questions from Express, the Government confirmed that this amount is related to unpaid invoices.
The to Treasury and Exchequer department explained that invoices are raised "for many reasons such as licences and services provided".
The Government also confirmed that a representative was present at the company's creditors meeting earlier this week, and that the Government has made a claim as a creditor of the insolvent company.
There is also a £511,342 loan owed to Santander Bank, which is 80% guaranteed by the States of Jersey under the Business Disruption Loan Guarantee scheme.
This means that the Government could be set to fork out another £400,000 to repay Santander Bank for the loan.
"The States of Jersey will stand in the shoes of Santander Bank if the loan guarantee is honoured," the document explains.
There is also a £19,950 loan owed to Investec Bank for the purchase of gym equipment. This is secured against the equipment itself which is estimated to be worth just over £6,000.
Pictured: Season ticket holders are classified as "unsecured creditors" and therefore look unlikely to get any money back.
Over £800,000 in debt is classified as "payments received in advance" which includes season ticket holders, sponsorship and advertising. The statement of affairs describes these parties as "unsecured creditors" suggesting that they look unlikely to get any money back.
A total of £110,156 relates to the unpaid September payroll. The document explains that employees resident in Jersey at the time of ceasing trading are entitled to submit a claim under the Jersey Insolvency Benefit Scheme, established to support employees of insolvent companies.
The company have confirmed that employees' ability to make a claim is "not affected by the payments made to employees by local sponsor, Hawk Group, which was equal to September salaries" which "Social Security have confirmed is considered to be a gift".
Alan John Roberts and James Richard Pirie of Grant Thornton have been appointed as Joint Liquidators of the company.
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