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Rugby Australia statement: Melbourne Rebels' administration

Rebels' Darby Lancaster in action on April 13 (Photo by Josh Chadwick/Getty Images)

Rugby Australia have issued a statement after the administrator for the financially stricken Melbourne Rebels recommended creditors accept a proposed deal to save the club, adding it may have been trading while insolvent for the last five years.

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The Rebels went into voluntary administration in January with Rugby Australia taking over their competition licence and covering player and staff payments until the end of this season.

RA is still working through a decision on whether to wind it up, but PwC administrator Stephen Longley has recommended in a report that creditors accept a proposal from directors to save the club, who this weekend play away at the Crusaders.

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Nemani Nadolo on his peak and once being considered “too big”

Former Fijian winger Nemani Nadolo chats to Liam Heagney about when he reached his peak and how he was actually at one stage considered too big to play rugby.

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Nemani Nadolo on his peak and once being considered “too big”

Former Fijian winger Nemani Nadolo chats to Liam Heagney about when he reached his peak and how he was actually at one stage considered too big to play rugby.

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. The deal will be put to creditors, which includes RA, at a meeting on May 3.

A statement read: “Rugby Australia acknowledges the findings of the administrator’s report regarding Melbourne Rebels Rugby Union Pty Ltd issued to the company’s creditors.

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“RA continues to solely fund and operate the Melbourne Rebels Club and its teams to ensure participation in the 2024 competitions. We have done so since the company was placed into voluntary administration by its former board of directors in January.

“For clarity, RA remains a creditor of the MRRU. We also welcome the positive news that MRRU employees are to receive full payment of their entitlements under the proposed deed of company arrangement.

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“RA notes the public statement made by the former directors of MRRU in response to the administrator’s report. The administrator has not made comment on the strength of the claims of the former directors of MRRU and has attributed no value to those claims.

“The administrator’s report suggests that MRRU and its former directors have been trading whilst insolvent since at least 2018. Given the seriousness of the conduct of the MRRU directors, the administrator has made a report to ASIC.

“RA notes section 7.2 of the report specifically states that MRRU’s financial difficulties are not due to RA’s lack of funding, but rather MRRU’s trading losses, lack of alternative funding, excessive costs and insufficient non-RA revenues.

“RA has complied with all its contractual obligations to MRRU. This includes the payment of all funding (which is subject to an agreement signed under authority by two MRRU directors on behalf of the MRRU board) and also paying all applicable PAYG amounts to MRRU, who misused these funds and did not pay them to the ATO, which was the intended purpose.

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“RA maintains that the true financial state of MRRU has not been disclosed to RA for some time – it was only once the company defaulted on its payment plan with the ATO last December that RA was made aware of the full state of the MRRU situation.

“In addition, RA has not been advised by the former MRRU directors that they are subject to director penalty notices from the ATO. Despite multiple requests from RA, the MRRU directors have failed to provide any viable proposal or business plan regarding the future of the Melbourne Rebels.

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“Contrary to the former directors’ statement, RA met with the former directors at their request in March to discuss a potential resolution. Despite RA’s request for a proposal, no fully-formed proposal was provided by the group.

“RA remains committed to rugby in Victoria, and will continue to actively consult with relevant stakeholders, as well as our legal and financial advisors regarding next steps. We will confirm our position on the future of the Melbourne Rebels Club in due course.”

After releasing its report in midweek, Longley said the directors’ deal was preferable to liquidation given litigation costs could leave creditors with as little as nine cents. “I’m 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,” it wrote.

The club’s liabilities were detailed in the report, with unsecured creditors and related parties claiming nearly $22million out of total claims of more than $23m. The unsecured creditors include the Australian Taxation Office, which is claiming more than $11m, and the Melbourne and Olympic Parks Trust ($1.14m) which runs the Rebels’ home ground, AAMI Park.

The report revealed in the last three calendar years, the Rebels incurred operating losses of $5.7m (2023), $5.3m (2022) and $5m (2021).

“My preliminary view is that the company may have traded whilst insolvent from December 31, 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 its report.

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2 Comments
N
Nickers 249 days ago

Farcical, to what end would someone want to pay to keep this thing going.

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AllyOz 20 hours ago
Does the next Wallabies coach have to be an Australian?

I will preface this comment by saying that I hope Joe Schmidt continues for as long as he can as I think he has done a tremendous job to date. He has, in some ways, made the job a little harder for himself by initially relying on domestic based players and never really going over the top with OS based players even when he relaxed his policy a little more. I really enjoy how the team are playing at the moment.


I think Les Kiss, because (1) he has a bit more international experience, (2) has previously coached with Schmidt and in the same setup as Schmidt, might provide the smoothest transition, though I am not sure that this necessarily needs to be the case.


I would say one thing though about OS versus local coaches. I have a preference for local coaches but not for the reason that people might suppose (certainly not for the reason OJohn will have opined - I haven't read all the way down but I think I can guess it).


Australia has produced coaches of international standing who have won World Cups and major trophies. Bob Dwyer, Rod Macqueen, Alan Jones, Michael Cheika and Eddie Jones. I would add John Connolly - though he never got the international success he was highly successful with Queensland against quality NZ opposition and I think you could argue, never really got the run at international level that others did (OJohn might agree with that bit). Some of those are controversial but they all achieved high level results. You can add to that a number of assistants who worked OS at a high level.


But what the lack of a clear Australian coach suggests to me is that we are no longer producing coaches of international quality through our systems. We have had some overseas based coaches in our system like Thorn and Wessels and Cron (though I would suggest Thorn was a unique case who played for Australia in one code and NZ in the other and saw himself as a both a NZer and a Queenslander having arrived here at around age 12). Cron was developed in the Australian system anyway, so I don't have a problem with where he was born.


But my point is that we used to have systems in Australia that produced world class coaches. The systems developed by Dick Marks, which adopted and adapted some of the best coaching training approaches at the time from around the world (Wales particularly) but focussed on training Australian coaches with the best available methods, in my mind (as someone who grew up and began coaching late in that era) was a key part of what produced the highly skilled players that we produced at the time and also that produced those world class coaches. I think it was slipping already by the time I did my Level II certificate in 2002 and I think Eddie Jones influence and the priorities of the executive, particularly John O'Neill, might have been the beginning of the end. But if we have good coaching development programmes at school and junior level that will feed through to representative level then we will have


I think this is the missing ingredient that both ourselves and, ironically, Wales (who gave us the bones of our coaching system that became world leading), is a poor coaching development system. Fix that and you start getting players developing basic skills better and earlier in their careers and this feeds through all the way through the system and it also means that, when coaching positions at all levels come up, there are people of quality to fill them, who feed through the system all the way to the top. We could be exporting more coaches to Japan and England and France and the UK and the USA, as we have done a bit in the past.


A lack of a third tier between SR and Club rugby might block this a little - but I am not sure that this alone is the reason - it does give people some opportunity though to be noticed and play a key role in developing that next generation of players coming through. And we have never been able to make the cost sustainable.


I don't think it matters that we have an OS coach as our head coach at the moment but I think it does tell us something about overall rugby ecosystem that, when a coaching appointment comes up, we don't have 3 or 4 high quality options ready to take over. The failure of our coaching development pathway is a key missing ingredient for me and one of the reasons our systems are failing.

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