The Melbourne Rebels between the risk of liquidation and a Consortium

The future of the Melbourne Rebels is increasingly uncertain. The Australian franchise, which entered administration at the start of 2024, received a report from its directors which outlined the company’s financial situation and possible future scenarios.

Melbourne Rebels: Financial Status Report

According to Planetrugby.com, administrator Stephen Longley’s report stated that: “My preliminary view is that the Rebels may have been operating while insolvent since 31 December 2018 and it is likely that debts were incurred which led to a business delinquency in excess of $16.8 million.”

To resolve the financial crisis of the Melbourne team, which Rugby Australia wants to keep alive for 2024 and that’s it, Longley does not see liquidation as an ideal solution, but rather accepts an agreement from a “group of investors: “I am from opinion that the likely return to creditors under the proposed act will provide a materially better outcome for creditors than a liquidation.”

The consortium claims there has been no response from RA despite submitting two offers. “We offered to meet RA to explain our proposal in detail. They chose not to accept this offer,” said group spokeswoman Georgia Widdup.

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The future of the Melbourne Rebels

Daniel Herbert, chairman of Rugby Australia, also spoke on the topic and questioned the sustainability of the club: “At the moment we are not in a position to pour a lot of money, money into something that is continuously losing money and there is no evidence that things may change in the future. It’s taking money away from other franchises, community rugby, women’s rugby and everything else.”

A settlement offer or Deed of Company Agreement (DOCA) would provide creditors with a small return, while offering full payment to players and staff who are collectively owed A$1.3 million.

A legal battle for the Rebels?

Another reason why Stephen Longley suggested that DOCA was the better option instead of liquidation, was the possible legal battle as the administrators intend to defend any insolvent trading claims and RA intends to defend any claims against them.

“Legal proceedings can be long and drawn out. Litigation carries the risk of an uncertain outcome and can be expensive. As a result, there is a real risk that action to recover delinquent trade receivables and RA receivables will not be successful,” said administrator Stephen Longley.

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