So the club says we are not going into administration but also didn’t really say anything at all. Having already looked at why the club might enter administration I will now look at what entering it could mean.
The first thing to note about administration is that it does not mean the end of the company. In fact it is actually referred to as a rescue mechanism. The idea is that it gives the company an opportunity to make changes to the way it operates and in doing so save the business.
The reality is that a lot of business which go into administration will survive. This can be seen in everyday life with companies such as HMV which have entered administration but continued to trade and exited administration.
Clearly the example of a high-street shop is very different to a football club. But clubs such as Portsmouth and Leeds have endured administrations and have lived to tell the tale. Yes neither of those clubs are where they were or indeed where they want to be, but at least they didn’t cease to exist.
There are a few ways in which the club could enter administration.
One of them could be in order to pave the way for a take-over. This is referred to as a pre-pack administration whereby they may find a buyer then enter administration and be sold quickly afterwards. This is often a secretive process but is something which could happen. But given the points deductions for entering administration in all reality this would be a strange move for a football club to take.
If they club did go down this route it may also be in the form of a company voluntary arrangement. This is essentially where a company says they cannot pay all of their debts so how much of it will you accept? For example Bolton may say they can only pay 50p for each pound owed. This though would seem like a strange course of action given that much of our debt is owed to Eddie Davies and I doubt we are under any pressure to pay any of it back at the moment.
A creditor could also put Bolton into administration. The financing set up over the summer included security over all of the clubs assets, I believe. The company, whose name I don’t know, who are owed this money could take action putting the club into administration. But given how young that arrangement is that would seem unlikely.
The big risk attached to us entering administration would clearly be what happens to the clubs assets. In order to deal with the debt or whatever expenditure the club needs to pay there would need to be assets sold off. This could be anything from members of the playing squad, should anyone want any of them, to our lovely stadium. This would of course be a huge cause for concern.
Luckily Bolton do own a lot of assets. That would give the club a good chance of getting out of administration and dealing with the financial problems which put the club there. But it would risk setting the club back decades. We may no longer have a stadium and have to do something unthinkable like share with Wigan Athletic. We may be left without a training ground and be forced to train at the Macron or just in a local park perhaps Borussia Dortmund style.
Whatever should happen in that situation it would likely be devastating for the club. But of course not as devastating as liquidation would be. Unlike administration liquidation is not a process designed to save the company. Liquidation involves the business of ending the company.
It is needless to say that this would be a sad day not just for Bolton fans but also for English football. To lose a founding member of the Football League would be unthinkable for me, even if it were Burnley.
There are different types of liquidation. It can be ordered by the court if it is established that the company cannot pay their debts. It can also be entered into voluntarily by the company in two processes both of which are initiated by the shareholders. If liquidation were to happen it would be the end and Bolton Wanderers would of course have to reform in some tin pot league probably with barely enough money to buy a tin pot.
Let’s just go ahead and pretend that Bolton is immune to anything a severe as liquidation, although I suppose on the upside it would put us out of our current misery…
Whatever happens over the coming weeks, months or years it is fair to say that financially Bolton are screwed. Without a new investor or Eddie Davies rediscovering his interest in the club administration or even liquidation seem horribly plausible.