How the Melbourne Rebels staved off Rugby Australia’s liquidation push

Melbourne Rebels directors have overcome opposition from Rugby Australia to win more time from a court as they attempt to save the debt-ridden Super Rugby club.

Federal Court Judge Catherine Button granted a 60-day extension on Thursday that will now allow the Rebels board to propose an alternative arrangement to creditors, in an attempt to avoid liquidation.

The Federal Court has granted the Melbourne Rebels’ administrators until April to hand down their final report.Credit: Australian Financial Review

Rugby Australia had opposed the bid in a creditors’ meeting on Monday and was instead pushing for the club to be liquidated.

PwC was appointed as administrator for the troubled club after it entered into voluntary administration in January, and was due to hand down is final report by March 4 – a day after the six-match Super Round in Melbourne.

That report will effectively determine the fate of the Rebels. The club owes a collective $22 million to creditors, and has just $17,300 in the bank, with a collection of assets consisting of office furniture, gym equipment and two cars.

Thursday’s extension gives the administrators until April 26 to hand down this report to creditors.

The Rebels board sought the additional 60 days at Monday’s creditors’ meeting so it could file an alternative proposal to creditors, known as a Deed of Company Arrangement (DOCA).

Outlining the Rebels’ argument in seeking the extension, Justice Button referenced the claims made by the Rebels directors, who are demanding that Rugby Australia cough up $8 million they say is owed to the club.

They allege the governing body owes $6 million for underfunding the club over a number of years, and an additional $2 million to cover the cost of Rebels’ player wages while they were on Wallabies duties.

Button outlined the directors’ argument that if Rugby Australia paid this amount that would pay off some of the $11.6 million owed to the Australian Tax Office, reduce the pool of debt owed, and improve creditors’ chances of receiving the amount they are owed.

“Directors raise that it would be more beneficial to extend the convening period rather have the company go into liquidation because the … proposal would have offer a … better return to creditors than an immediate winding up,” she said.

The board – chaired by Paul Docherty, and made up of lawyer Tim North, investor Lyndsey Cattermole, Rugby Victoria finance officer Owain Stone, Gary Gray, Georgia Widdup, and Rugby Victoria president Neil Hay – have until March 22 to submit the proposal.

Creditors will then vote on whether to enter into this arrangement.

Administrators agreed to the extension on Wednesday night, the court heard, noting the arrangement proposed by the board could be of greater benefit to creditors than an immediate winding up.

In summarising the extension, Button said: “The company has a board of seven directors, the administrators consider them persons of means able to support the [deed of company arrangement].”

She added that the board had pooled together $100,000 to cover the additional cost to the administrators.

Rugby Australia unsupportive of extension bid

The successful court outcome for the Melbourne Rebels board comes amid revelations that Rugby Australia opposed the extension when consulted by administrators.

Asked about their objection, a spokesperson said: “We didn’t think it was in the best interests of the staff.”

The Rebels board had originally approached administrators on Sunday to seek a 120-day extension. Creditors were then consulted on Monday about the extension, though a unanimous decision was not reached.

Rugby Australia’s Phil Waugh in 2022 alongside Rugby Victoria president Neil Hay and Reece Hodge, of the Melbourne Rebels.Credit: Getty Images

Among the concerns cited during that meeting, outlined in meeting minutes filed to the corporate regulator, was the possibility it would delay Rebels staff from being granted their redundancy packages.

The 10 Rebels staff made redundant this month can only claim their redundancy package under the federal government’s Fair Entitlements Guarantee after the company enters into liquidation.

Deloitte’s Jason Tracy – representing Rugby Australia – told the meeting the sporting body did not support the request, and emphasised their belief that a “liquidator would be best placed”.

“Mr Tracy advised that RA’s position was that it would be against the interests of creditors for an extension to be sought,” the minutes read. While the meeting minutes filed to the regulator did not specifically mention Tracy pointing to the issue of staff as a reason for opposing it, a Deloitte spokesperson said he did raise it as a concern during the meeting.

Rugby Victoria’s representative MaryJane Crabtree dismissed the worry raised about staff not receiving what they’re owed, and proposed an extension period between 45–60 days.

“She believes the directors are highly motivated to ensure employee entitlements are paid.”

The court also heard on Thursday that an affidavit supporting the extension could not be publicly released, as it detailed potential claims against Rugby Australia. Button said those details could prejudice the outcome of the Rebels.

The Rebels owe $11.6 million to the Australian Taxation Office, $5.7 million to board members, and $2.8 million to suppliers – which include sponsors that paid their fees upfront.

Adding to the list of debts is the $1.1 million in unpaid stadium fees, $720,000 owed to the State Revenue Office and $250,000 in superannuation owed to employees.

What the Melbourne Rebels owe

• $11.6m owed to the Australian Taxation Office 
• $5.7m owed in loans
• $2.8m owed to suppliers, including amounts advanced by sponsors
• $1.1m owed to MOPT relating to unpaid stadium usage, plus an additional amount in relation to future lease liabilities under the existing agreement
• $712k owed to the State Revenue Office in relation to unpaid payroll tax

The court heard the Rebels’ assets appraised so far have a total value of $122,000.

“Some other assets in the nature of equipment, training apparel and memorabilia … the value of that is yet to be determined,” Button said.

New Rebel Jack Maunder.Credit: Getty Images

‘I thought I had got away from this’: Rebels recruit speaks out

New Rebels half-back Jack Maunder thought his move to Super Rugby would take him away from clubs’ financial woes.

The English playmaker has quickly fallen in love with Melbourne and his teammates since arriving with his girlfriend late last year, so he was shocked when the Rebels’ future was plunged into jeopardy just weeks before their season-opener against ACT Brumbies at AAMI Park on Friday night.

Maunder still has strong memories of Worcester and Wasps dropping out of the 2022-2023 premiership season in the UK after going into administration and leaving their players without jobs. “I thought I had got away from this when I left the UK as it was pretty rough last year in the premiership,” he said.

“I had a few good mates at clubs that went into administration [and immediately stopped playing].

“I think it’s really amazing here how RUPA [the players’ union] have stepped up and the clauses that they have in the contracts and everything, so the boys can carry on playing.”

Maunder has also been amazed by the team’s leadership group, who have made sure both older and younger players have been supported. But he felt powerless as many club staffers lost their jobs.

“On a personal note, it is just sad when people are losing their jobs, I just feel sad about it as we are all human and, rugby aside, everyone has things going on in their lives,” Maunder said.

“We have some great people above us, on the board and stuff, so you really want to help them and you feel like you want to help the situation and you can’t really, at the moment, which is a shame.

“But that has also united us and, as players, we want to make the people behind the scenes proud and play our best season.”

With Roy Ward

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