Musos creditors won’t wait for Demo merger offer
Friday, 28th March, 2014
By Darrin Manuel
Creditors of the Musicians’ Club have baulked at a delay that could have secured a lifeline from the Democratic Club.
A creditors meeting was held last night to decide whether to proceed with a strategy created by administrator Robert Brennan, or delay the meeting by up to 45 days to allow the Democratic Club to put forward a case for amalgamation.
Mr Brennan’s plan involved a 12 month period in which the club’s debt would be refinanced, its staff restructured, and the carpark possibly sold for the purpose of developing a motel on the site.
The plan would ensure the full payment of staff entitlements, and return a minimum of 50 cents in the dollar to other creditors.
Under an alternative preliminary plan put forward by the Democratic Club, it would take over the running of the business and use its own strong financial position to secure the future of the Musicians Club.
The Demo Club’s proposal would also secure staff entitlements, and pay an immediate dividend of between 10-20 cents to other creditors, with a long term return of 70 to 100 cents in the dollar.
However the plan, which was outlined by Demo Club General Manager Karren Howe, would have also resulted in the replacement of the current administrator with BRI Ferrier’s Peter Krejci. This detail sparked an impassioned defense from Musos president, Marie Gelmi.
Ms Gelmi said Mr Brennan had proven himself as a competent administrator by helping the club through a previous financial crisis, and should not be replaced.
Ms Howe said that if the Demo did take over the club, it would prefer a completely independent party handling the administration process.
While the Democratic Club’s proposal appeared attractive on paper, the club required up to 45 days in which to view more in-depth financial details of the Musicians Club before it could commit to an amalgamation.
Mr Brennan advised against adjourning the meeting for that time period, saying it would cause extra expense, instability, and make it difficult to appoint a new general manager and attract catering staff in the interim.
He also contended that his strategy could deliver many of the outcomes promised in the Demo Club’s plan.
After the merits of both options were debated, a vote was taken with creditors voting 33-24 against adjourning the meeting. A resolution to proceed with Mr Brennan’s plan was then supported by the majority in the crowd.
“It’s the best outcome for the club in terms of certainty, and plans to maximise trading performance over the next 12 months and explore all options,” said Mr Brennan.
Mr Brennan added that although the adjournment was voted down, his plan could still accommodate a merger with the Democratic Club at a later date.
Meanwhile Ms Howe said she respected the creditors’ decision, and stressed that it was important for Broken Hill that the Musicians’ Club survive.
“We’ll just sit back now and see what happens and if anything changes,” she said.
“It was a good opportunity for us, we just wanted to help and offer assistance. We don’t want to cause any trouble.”