CREDITORS owed almost £1.7 million following the 2023 collapse of the Jersey Reds have virtually no prospect of getting a penny back, according to a new report.
The documents, published by liquidators Grant Thorton this week and seen by the JEP, lays bare the full scale of the financial wreckage left by the collapse of the rugby club.
In September 2023, the Island’s only professional sports team ceased trading overnight, just months after celebrating its greatest achievement in winning the Championship title.
Grant Thornton has confirmed that unsecured creditors are owed £1,578,139 by the Jersey Rugby Football Club (2016) Trading Limited, while preferred creditors are owed a further £122,390.
In both cases, the liquidators state that “there are insufficient funds to enable a dividend” to be paid.
On the morning the Reds players and coaches were due to meet at the Airport to travel to England to face the Cornish Pirates, all staff were instead called to a hastily arranged meeting at the team’s St Peter ground where they were told the club was facing liquidation and that that month’s salaries would be unpaid.
Attempts to find a “white knight” investor failed, as did a bid for further rescue funding from government, and the club entered liquidation shortly afterwards.
It came at the end of long history of financial troubles dating back to 2016, when cumulative losses made it necessary to raise £1.5m through a sale-and-leaseback agreement covering the club’s assets.
The 2018/19 season saw the Reds end in fourth place, which was the highest-ever finish in their seventh season in the Greene King IPA Championship. But that same year, the Reds needed a £150,000 Government grant to finish the season amid a £300,000 annual deficit.
In 2020, the team became one of 12 clubs in English rugby’s second tier to learn that annual central funding from Rugby Football Union was to be slashed from £480,000 to £288,000.
Amid continuing struggles, compounded by Rugby Football Union funding cuts, it was decided in 2022 to separate the professional arm of the club from the amateur one.
In April 2023, the team was crowned Championship winners for the first time but were unable to be promoted or gain any prize due to stringent RFC rules relating to their stadium size.
It later emerged that the Reds had been given £370,000 from the public purse in the three months prior to the club’s collapse in September 2023.
When creditors met in October of that year, the Jersey Reds faced almost £1.5m in unpaid loans and a tax bill of more than £500,000. At the time, the company’s own statement of affairs estimated assets of just £142,714 against debts of more than £3.1 million.
The liquidators’ annual report, published earlier this week, shows little has changed since then.
Preferred creditors – a category that includes unpaid wages, holiday pay and bonuses, as well as social security payments, income tax, GST, rent and parish rates – have claims totalling £122,389.71, plus additional residual employee claims.
Despite their priority status, the liquidators confirm there is no money available to pay preferred creditors.
Unsecured creditors, who make up the bulk of those owed money, face an even larger collective loss of £1.58m, again with no dividend available.
Jersey Reds season ticket holders are among those classified as “unsecured creditors”.
The report also highlights the costs of unravelling the rugby club’s affairs.
Liquidators Grant Thorton explain that staff have sought to act “in a cost-effective manner”, but racked up a bill of over £63,000.
“The liquidators have incurred significant time costs investigating the affairs of the company,” the report explained.
“Due to the complex nature of the investigation, time costs were predominantly incurred at director, manager and senior administrator level.”
Grant Thornton has billed for 199 hours of work at an average rate of £318.84 per hour.
Of that, £8,300 plus GST has been invoiced so far, alongside £717.56 in disbursements.
The report also revealed that, due to “an oversight by the company’s bank”, a TV licence direct debit was not cancelled after liquidation – resulting in a £169.50 payment that is unable to be recovered.
Jersey Reds creditors are invited to an annual meeting at the Grant Thornton offices on 30 January at 10.30am.
