Bolton Wanderers: Administration Explained

It has been rumoured this past weekend that the (once) mighty Bolton Wanderers may well be heading for administration.

The internet chatter has been debunked, in a pathetic way, by the club - but this hasn't stopped the rumours completely.

So what is administration and what would it mean for Bolton?

What Actually 'is' administration?

Well, basically administration is a legal procedure that allows a business (ie-Bolton Wanderers) in financial trouble to keep operating without being forced to sell off assets to pay debts.

The aim would be to give our board time to restructure its finances and put its business on a sounder footing. In theory.

It is, of course, preferential to liquidation or receivership for Wanderers, with the legal purpose being "the survival of the company as a going concern".

Creditors normally favour going into administration over a move directly to liquidation because there is a greater chance they will get all of their money back.

How does it happen?

A petition is made to a magistrates court by its creditors or, more often, its directors.

Before an administration order is granted, these parties must convince the court that the club is unable to pay its debts.

There is no requirement to inform supporters or the media until the administrator himself wishes to go public. This could be problematic, given Phil Gartside's now-legendary reluctance to speak to the wider world.

The administrator, usually a named individual at an accountancy firm, is appointed by the court.

But as it is the company that applies to the court for the administration order, it is quite likely that the court appoints the company's choice.

What does the administrator do?

They will immediately take on the role of running the business with the aim of getting the club's creditors as much money as possible while keeping the club alive. So it would mean Philly G relinquishing control of Wanderers.

He will make a series of proposals regarding the company's future - such as a sale of assets like players. This is of course the mega-downside of administration. Imagine losing Liam Feeney. Doesn't bear thinking about.

What can the fans do?

There is no legal requirement for an administrator to take any notice of supporters' wishes. But on a practical level, many administrators prefer to bear in mind the feelings of the fans.

In cases where fans have formed a single pressure group the administrator has often met with them to discuss his proposals.

How does a club start on the road to recovery?

When the objectives of the administrator have been met - satisfying the creditors and insisting on certain business practices - he will apply to the court for his release.

A Creditors Voluntary Agreement can also be used to get a club out of administration.

This is a debt restructuring proposal from the club to its creditors, a private agreement to pay off some of the money owed at a certain, mutually satisfactory, level.

The club should then be left as a solvent entity, in charge of its own finances and able to trade on - but many of its assets may have gone.

How bad can things get?

If restructuring is not successful, administrators will move to liquidate the company, selling off its assets to pay back creditors like banks and bondholders.

If all the debts are met and there is money left over, this is distributed among shareholders.

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Thanks to the internet, and to Google for the information pertaining to this piece. It's a scary world out there.