Doubts about Kings' rescue plan
rugby365 can reveal that both sets of lawyers opposing the business plan – underwritten by Chris Wishlade and Integrated Sport, according to court documents – have cast doubts over the availability of the funds (ZAR100-million) that form part of the rescue plan.
After a provisional liquidation order earlier this year, in a desperate bid to avert the order becoming final on May 10, lawyers for EP Rugby claimed they had secured a 'sponsor' to bail them out.
EP Rugby filed the business rescue application on May 24 and it was set down for hearing on May 31.
However, the opposing parties – lawyers for MyPlayers (19 players) and another group of 19 players – asked for postponement because they were given just a couple of days to consider the business application and that was not sufficient time.
The absence of important documents and information in the business rescue application means the players' lawyers are very suspicious about the viability of the rescue plan.
They are not convinced that the funds are indeed available.
Eugene Henning, Managing Director of MyPlayers, said they require "additional" information before being able to make a call on the viability and merits of the rescue plan.
"It would be reckless if we did not understand the scope of the business rescue plan and a postponement was the only way to get to that understanding," Henning told rugby365.
The MyPlayers boss said any talk of a "payout" to players is based on the assumption that funds are available.
"Our legal team is wary of such assumptions and therefore we requested further information," Henning said.
Craig Jessop, of law firm Brown Braude & Vlok and acting on behalf of the group of players not represented by MyPlayers, also cast doubt about the availability of the funds.
"We felt the need to investigate certain allegations contained in the application for business rescue and also to secure further information particular to the daily running affairs and cost of EP Rugby," Jessop told rugby365 in an interview.
"What is concerning in the matter is in the provisional liquidating forms there was a request for certain accounting records and contracts from EP Rugby and that has not been supplied," he said.
"From a perspective of information sharing and verification of papers we don't have the necessary information."
He said they have opted, for now, to oppose the application for business rescue.
"My position on the point of the funds is, as far as I am aware, there is an amount of ZAR20-million that has been paid into the trust account of [Paul] Bester [the lawyer for EP Rugby] – I have been informed as much by Bester," Jessop told rugby365.
"For the balance, to get up to ZAR100-million, there are dotting of I's and crossing of T's and a whole lot of [other] things we still have to go through.
"One doesn't know – everything turns on the viability of the business plan.
"It is not as if the ZAR20-million that has been placed into the attorney's trust account, as we have been advised, is readily available for distribution.
"The concerning part is, of the ZAR100-million supposedly to be invested, only ZAR4-million at this stage appears to be earmarked for all the creditors, of which we are only a portion thereof."
In court documents it was claimed that Integrated Sport will make available an amount of ZAR4-million to pay pre-rescue debts in a "compromise".
The players are claiming a total of ZAR18-million in salary arrears alone. Then there are other creditors, with reports that SARS are owed ZAR20-million alone.
"Those are issues we are investigating at the moment," Jessop said.
"I can't tell you all of the issues, but that [that only ZAR4-million is available to creditors] is one of the things. There are concerns, I am not going to go into the nature or the extent of the concerns."
The legal teams of the players have been given the opportunity to file their opposing papers by June 28.
"That gives me enough time to investigate certain allegations and to obtain the information," Jessop said, adding: "If necessary we will utilise the rules of court to get further information, but hopefully that will not be necessary and the information will be supplied."
The matter has been postponed, both the application for business rescue and the application for final liquidation, until August 4.
"On that date we will know if the business application will be accepted or kicked out and final liquidation implemented," Jessop added.
"If it turns out the application [for business rescue] is viable and it is something that can work, then of course there is no point continuing the opposition to the business rescue.
"For present purposes, we can't say that.
"When a business rescue plan is placed at the doorstep of the interested parties, my clients, a reasonable individual will understand we need an opportunity to investigate to understand what that means to my clients and also to understand if the proposals that are being made is actually viable.
"We will only know answers to that once we receive our information."
In the court documents Christopher Wishlade, of Integrated Sport, said subject to the business rescue plan being accepted, the company was willing to invest ZAR20-million a year for the next five years.
A total of ZAR100-million would be administered through the company's investment vehicle, RU Asset Management Ltd.
All negotiations, operations and any other rugby-related work would be carried out by Integrated Sport, he said in a letter before the court.
Wishlade said in the documents before the court that, as an investment group, it had already successfully acquired a club in France and was in negotiations over a Premiership club in England.
By Jan de Koning
@King365ed
@rugby365com
