Financial Expert Required | Vital Football

Financial Expert Required

The 9.05 million debt has resided in a company called Priestfield Developments which is a wholly owned subsidiary of GFC Holdings which also is the major shareholder in GFC. The debt being secured by a guarantee. In Sept PS elected to voluntarily 'write off' the company from Company House records. This was approved in Oct and will be effective in the next few days. Normally any assets left in dormant companies become the property of the state. I can't see Mr Hammond taking 9.05m onto the UK debt, so where's it gone???


Vital 1st Team Regular
I don't have your answer, LE14, and I know it is all terminology but I would point out that obviously this dormant company does not have an asset worth 9.05m. It has a debt/liability of 9.05m.

I thought ownership of the ground had been transferred to a subsidiary company which had in turn charged it as security (collateral) against a debt/liability. That would be known as a secured loan and the ground would need to be sold and the lender repaid in full before any other creditors could make a claim on any residue, usually caused by an increase in value.

The restructuring was done some time ago so I am not sure but I believe that when the ground was last valued, the Bank set up one secured loan for that value and then an unsecured loan for the remainder of the club debt for which PS had given a personal guarantee. The loans were to be in the name of different subsidiaries.

If I had to hazard a guess, I would say that if the company is going in to voluntary liquidation, the debt will be transferred to Scally as effectively he is liable for the amount anyway under his personal guarantee to the Bank. Either that or the 9.05m debt will be transferred to another subsidiary for which PS (or possibly a new owner?) will give another guarantee


Vital Squad Member
A few years ago The Gills and Priestfield Developments owed a total of around 14 million to the Bank of Scotland. Now we were totally insolvent and the ground was worth no more than 5-6m at the time. So BOS agreed that if we could scrape together 5m they would write off the rest of the debt in their books as they'd never see the money anyway. Gills managed to get a loan for 4m from Barclays and the directors stumped up a million and BOS were off our backs.

Now although BOS would have written off the 9m in their books, Gills kept it in one of their companies for a bit. There could be several reasons for this - 1. making absolutely sure it couldn't be resurrected later on or 2. the Revenue arguing that the write off was taxable etc. What is now happening is that the write off is now finally being shown as such in Gills books to reflect reality.

After BOS agreed the write off the Gills company was once again able to carry the ground as an asset in their books.

In recent years the company, together with the directors, has been able to pay off the Barclays loan, too. Some of the windfalls for selling players etc, must have helped.


Vital 1st Team Regular
Thanks, Arthurly.

That sort of makes sense although I think BOS were generous to write off as much as 9 million, considering the remaining 5 million was not at risk anyway if they had a legal charge over the ground.

I suppose the Banks were sensitive about bad publicity after the crash and if they had foreclosed they would have needed to have made the club homeless to recoup the 5 million.

The timing could also tie in with the fact that the PPI claims provisions which caused the Banks to report losses are nearly at the end so it is easier for the Banks to include a write off such as this in its most recent figures.


Vital Youth Team
Gillingham were the least of BOS's problems given the amounts they wrote off what we owed was insignificant to them and would have earned them so much bad press had they tried to collect it that t it would have need up costing them more in bad PR and lost business.

The only issue was the IR and how they treated it. Given again they are not in the business of bad PR at the moment PDPS has found himself in a good position to negotiate and did it very well.

Unusual times give some unusual opportunities and that is what happened here. BOS's mortgage book was run on the same model as Northern Rock only they were slightly less aggressive than NR. HBOS were starved out of existence of cash by the hedge funds smelling a profit but Lloyds walked in and took it over not fully knowing what a state they were in which led to them nearly collapsing.

Lloyds then got bailed out by the government and basically got told not to take any viable businesses under but to negotiate unrecoverable losses which they would then be able to use as tax credits in future years.

In order to refloat Lloyds the government need all these smaller issues closed quickly and quietly with a minimum of fuss.

Enter GFC who can create you a major stink but not a sum that will make a difference to anyone but GFC. Close it down get out and move on. 20% recovery is better than no recovery and bad PR. Especially in a tory marginal seat.



Vital Youth Team
All the time that the whole debt was outstanding the whole debt would have been regarded as none performing by the Bank. Even if the Club were paying interest on all or part of the debt that interest would have been applied to a reserve against the debt.

Once the 9m had been written off the Bank were, in theory anyway, able to apply any interest paid on the remaining debt to profits, or more likely to reduce current trading losses.

We don't know, and probably never will know, if the repayment of the secured element in the short term was a part of the "write-off" agreement or if the transfer to another Bank was arranged by the Club to obtain lower interest rates.