The administrator for the financially stricken Melbourne Rebels has recommended that creditors accept a proposed deal to save the club, adding it may have been trading while insolvent for the last five years.
The Rebels went into voluntary administration in January with Rugby Australia (RA) taking over their competition licence and covering player and staff payments until the end of this season.
RA are still working through a decision on whether to wind it up, but PwC administrator Stephen Longley has recommended in a report released on Wednesday that creditors accept a proposal from directors to save the club.
Rebels directors have proposed a deed of company arrangement (DOCA) which would guarantee employees 100 per cent of their entitlements, but leave unsecured creditors with as little as 15 cents to the dollar.
Longley said the directors’ deal was preferable to liquidation given that litigation costs could leave creditors with as little as nine cents.
“I am of the view that the likely return to creditors under the proposed deed will provide a materially better outcome for creditors than a winding up,” Longley wrote.
The club’s liabilities were detailed in the report, with unsecured creditors and related parties claiming nearly $22 million out of total claims of more than $23 million.
The unsecured creditors include the Australian Taxation Office, which is claiming more than $11 million, and the Melbourne and Olympic Parks Trust ($1.14m) which runs the Rebels’ home ground, AAMI Park.
The report revealed that in the last three calendar years, the Rebels incurred operating losses of $5.7 million (2023), $5.3 million (2022) and $5 million (2021).
“My preliminary view is that the company may have traded whilst insolvent from 31 December 2018, and that it is likely that all debts that remain unpaid were incurred which could result in an insolvent trading claim exceeding $16.8m,” Longley concluded in the report.
RA were expected to comment later on Thursday, with the deal put to creditors at a meeting on May 3.
Meanwhile, Melbourne coach Kevin Foote says the Rebels can’t take any comfort from the Crusaders’ position at the bottom of the ladder ahead of their Christchurch clash on Friday.
The 12-time Super champions, including the last five straight outside of the pandemic-affected seasons, are languishing in last spot with just one win.
The Rebels meanwhile, sit fourth, which is their highest-ever ranking at this point in the season and are hunting a historic fourth successive win.
But having conceded an average of 55 points from seven successive losses to the Crusaders, Foote is expected another tough contest from the home side, who welcome All Blacks lock and skipper Scott Barrett back from injury.
“We’re not looking at the ladder at all,” said Foote, with the Rebels losing their own lock in injured work-horse Lukhan Salakaia-Loto.
“The Crusaders have got a reputation – and they’ve earned that reputation – they’re a great team and they’ve got some guys coming back.
“Anytime you go to New Zealand to play a team it’s a massive challenge … they will be hurting a lot and we respect that so we know what’s coming.”