Finance

Damage claim threatens the survival of the publisher of football magazine ELF

Earlier this month, the Gelderland court in Arnhem ruled in favor of the curator. The exact extent of the damage has yet to be determined. The publisher says it will appeal.

According to the publisher’s lawyer, the definitive award of the claim would have ‘far-reaching and irreversible consequences’ and ‘will lead to the bankruptcy of the other companies within the group’.

Sunny future

The future seemed so bright in 2016. At the end of that year, the Gelderland publishing house Van Munster Media Groep took over its peer Sports Media Corporation. That Hague company brought the football magazines ELF and Panna! on the market.

ELF, in particular, has a long history, dating back to 1982. With a circulation of 30,000 copies, it claims to be the largest football monthly in the Netherlands. In 2014, the people of The Hague were even in the race for the takeover of the even more famous weekly magazine Voetbal International.

True multimedia brands

No wonder the new owner of ELF, Michael van Munster, was overjoyed with his latest acquisition at the time.

“This adds a wonderful new segment to our portfolio. Football is the largest entertainment industry in the country,” said the publisher of business and car magazines, among others. “We think we can grow the titles into true multimedia brands in the coming years.”

Bankruptcy

It appears that not much has come of that bright future. ELF and Panna! Although they still exist, Van Munster appears to have cut an ugly bend for that.

The Gelderland publisher used a construction that led to the bankruptcy of subsidiary Upton Park in early 2019.

Internal fees

Upton Park, named after the former stadium of English football club West Ham United, was the business unit that provided editorial, commercial and administrative work for the football magazines for many years.

Upton Park received compensation for this from its sister companies within the publishing house. In the years before the bankruptcy, Upton Park had a turnover of about half a million with four editors, three salespeople and an administrator.

In early 2019, the publisher filed for bankruptcy of Upton Park. After the sister companies ceased payments, the company could no longer meet its financial obligations. Because part of the debts and costs disappeared due to the bankruptcy, the rest of the sports publishing company was able to continue.

deliberate choice

According to publisher Michael van Munster, the bankruptcy of the business unit was due to external factors, such as the difficult market for magazines in general, the postponement of the liberalization of the gambling market and the Dutch national team’s lack of the 2018 World Cup, which meant that the subscriber base and individual sales declined.

However, the trustee Christiaan Donners, who has to settle the bankruptcy, came to a different conclusion. In his bankruptcy reports it can be read that, according to him, the bankruptcy was the result of a willful choice to let losses fall on the bankrupt company and to turn off the internal money tap.

“The losses of the publishing house have been passed on to this BV”, explains the curator when asked. “In this way, the company got rid of staff and debt cheaply. Some of the people were then deployed again for the company. I say that this cannot be done.”

Maladministration

As early as the fall of 2019, the trustee in bankruptcy Donners appears to have held the directors of the bankrupt Upton Park (two parent companies and Van Munster himself) liable on the basis of improper management for the total damage to the estate in the bankruptcy.

According to the bankruptcy trustee, creditors, including the Tax Authorities and the UWV, have currently submitted more than 200,000 euros in claims to him. Including additional costs, the total estate deficit can amount to more than three hundred thousand euros.

Trustee wins lawsuit

Publisher Van Munster believes that he is not liable and therefore does not want to pay. That is why the trustee in bankruptcy Donners had the bank balances and shares of the companies and the entrepreneur seized earlier this year, and he went to court.

A verdict, which became public on Thursday, shows that the trustee there was proved right earlier this month. The Gelderland District Court also ruled that Upton Park was under improper management and that the directors were liable for the full damage in the bankruptcy.

Threat of new bankruptcy

For Van Munster, the verdict is a sensitive defeat, with potentially far-reaching consequences. During the lawsuit, his lawyer announced that an award of the compensation claim would lead to the bankruptcy of the other parts of the publisher of the football magazines Elf and Panna!

The 53-year-old entrepreneur emphasizes in an explanation that, according to him, it is far from that yet. “Those other companies will not go bankrupt at all. Because what the trustee says is not correct,” says Van Munster.

He is confident that the ruling of the Gelderland court will ultimately not stand. “We have submitted documents that were not included in the lawsuit. We will therefore appeal against that decision. As long as it is under the court, I can not report anything about it.”

Appeal

According to curator Donners, a possible bankruptcy of the other parts of the sports publishing company is not legally relevant. “That does not mean that the claim no longer exists. Moreover, as the ultimate director, Van Munster is also liable as a private person.” The bankruptcy trustee has therefore also seized the shares in his management BV, with interests in other companies.

The trustee also says that he looks forward to an appeal with confidence, but is also open to a settlement. “An appeal costs a lot of money. If the publisher loses that, the bankruptcy deficit that he has to pay for will only increase.”

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