For many Clubs across Australia they are facing some difficult decisions when it comes to the viability of their much-loved organisation.

A decline in punters, increasing day-to-day costs and the need for significant infrastructure upgrades are all issues that have to be considered by the Boards.

Rapsey Griffiths were recently contacted by Miller Park Sport & Recreation Club, who had been through some challenges in the last 12 months, with the Board concerned about the ongoing sustainability of their Club.

Board member Ian Sneddon said that a few years ago a significant amount of money had been spent on redoing the building.

“It was a decision made by people no longer with the organisation, but something the current Board was having to deal with,” Ian said. “We just found that we were paying interest on the loan for the building works, but not really getting anywhere.

A truck driver by trade, Ian is indicative of many Board members – passionate about ensuring the best outcome for his local Club.

“I really didn’t want the Club to shut,” Ian said. “I had essentially put my business on hold for 12 months to try and see this through.”

After discussions with their accountant, the Board decided to ‘bite the bullet’ and contacted Chad Rapsey of Rapsey Griffiths.

“We undertook a review of the Club’s financial situation, and they were right to be concerned,” Chad said. “We then attended a Board meeting to discuss the potential options available to the Club and advised the Board Members of their legal responsibilities when it comes to administering its affairs and finances of the Club.”

Those responsibilities are, they must act competently, honestly, in good faith, in what they consider the best interests of the organisation and the duties of the club and prevent the Club from trading insolvent.

“On our assessment the Club appeared to be insolvent and were running the risk of insolvent trading,” Chad continued.

The Rapsey Griffiths team presented the Board with the following options.

• Turnaround

In this informal process a specialist turnaround consultant is engaged to review the club with a “fresh eye”. They identify problems and create solutions club insiders may not have thought of. After discussion with the Board the Club did not have the expertise, appetite or cash resources to peruse this option.

• Amalgamation

This option involves a financially viable club (the parent club) acquiring the assets and liabilities of the club in financial trouble (the target/dissolved club), allowing the Club to survive.

• Voluntary Administration/Deed Of Company Arrangement

If the turnaround or amalgamation options aren’t viable, completing a Voluntary Administration (VA) / Deed of Company Arrangement (DOCA) is a formal option. This is where the club’s board resolves the club is insolvent (or likely to become insolvent) and appoints an administrator to take control of the club, and assess the club’s viability moving forward.

• Liquidation

Finally, there’s liquidation – a formal appointment that terminally winds up the affairs of a club that can’t pay its debts when they fall due. This is generally a shutdown scenario. Club staff employment is terminated, and the club’s assets sold to repay creditors

“It was our recommendation the Club urgently explore the prospects for an amalgamation partner and should an amalgamation partner not be found in a short period of time the Board should appoint an Administrator,” Chad said. “In order to help the Board with this process we facilitated the Expressions of Interest for amalgamation and assessed the offers that came in.”

The preferred amalgamation partner was Greta Workers Sports and Recreation Club and in early July 2015, the Independent Liquor and Gaming Authority approved the application.

It was through the advice and guidance of insolvency specialists the Board of Miller Park Sport & Recreation Club was able to save the Club from closing and ensure its future financial viability.

“To be honest it was touch and go there for a while,” Ian said. “But Chad and the team were able to show us the realities of our options and help us work through to where we are now.”

“We have a new Chef in the bistro who is bringing in new punters and the Board feels much more confident about where we will be in 12 months time.”