Derby face liquidation unless £20m tax bill written off

Derby County are likely to be liquidated unless HMrC agree to write off more than £20million of debt, prospective buyers believe. Derby’s administrators are to meet the tax authorities this week in talks that will prove crucial to reducing their £29m bill and attracting would-be investors. HMrC would need to reduce what they are owed to around £7.5m for a takeover to make business sense — but that is unlikely because of the message it would send to other eFL clubs with outstanding tax bills. ‘the reality among those who have looked to buy Derby is that liquidation is more likely than not,’ a source said.

BUYERS of Derby County believe the club is in danger of being liquidated unless the tax authorities agree to quarter the £29million they are owed. Derby’s administrators, Quantuma, are to meet the taxman this week in talks that will prove crucial to the club’s future. US businessman Chris Kirchner has declared his interest in buying the Rams, but other parties have taken a step back. Sources have told Sportsmail they fear the Championship club is ‘sleepwalking’ towards oblivion, and that the administrators’ optimism does not reflect reality. A source close to would-be investors said a deal to buy Derby only becomes viable when the debt inherited does not vastly outweigh the value of the club, which is hard to determine given their 21-point deduction and likely relegation to League One. HMRC would need to reduce what they are owed to around £7.5m for a takeover to make business sense — but that is unlikely because of the message it would send to other EFL clubs with outstanding tax bills. A source said: ‘The administrators say they are confident of striking a deal with HMRC, but while we do not know what that deal is, how can you decide to buy the club? They are making positive noises, but it is in their interests to do so. ‘The reality among those who have looked to buy Derby is that liquidation is more likely than not. As it stands, the debt is nearly £30m to HMRC, more than £20m to MSD Holdings (US investment group) and another £10m of football debt. No buyer is going to take that on. ‘The only body who can convene to save Derby is the Government. It needs them to get the Treasury, the EFL, Mel Morris (Derby owner) and MSD around a table and put together a plan to rescue the club.’ A source added: ‘It is in MSD’s interests to keep Derby alive for now, in the hope of getting their money back. But they made a bad loan. There will come a time when they might think they are throwing good money after bad and walk away. ‘Unless the administrators cut a deal with HMRC, they are kicking the can down the road. The EFL will be happy with this until the end of the campaign, as they want to avoid a club going under mid-season. ‘The bottom line is, for Derby to survive, all those who are owed money will have to agree to take less. ‘There is still interest out there, but right now Derby does not represent any value or business logic.’ Derby have been docked 21 points — 12 for entering administration and nine for previous financial breaches — leaving them bottom of the Championship with one point after 20 games. They also face compensation claims from Middlesbrough and Wycombe, which together exceed £50m.