The Wollongong Hawks' debt has blown out to almost $2 million, administrators have revealed.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
In a report to creditors recommending the company be wound up, administrator Nicols and Brien said the club owed $1,965,034, including $673,000 to employees and players.
However administrator Richard Brien told the Mercury it was too early to rule out future sponsorship deals pulling the club back from the brink.
The deficiency appears to relate to "trading losses" incurred by the company and employee claims that have "crystallised on the appointment of the administrator", according to the report released on Monday.
The employee claims were substantially due to termination of player contracts in addition to leave entitlements of the employees of the company, the report said.
It also revealed the company owed $550,155 to the NBL but had assets of $107,197, including $40,000 from Wollongong Coal.
"On the basis of there being no proposal to put to creditors, the administrator recommends that it is in the best interests of creditors that the company be placed into liquidation."
As of the report's date, March 30, "no detailed proposal has been received for a Deed of Company Arrangement with the creditors of the company".
Last week the Hawks announced they had secured Multi Civil and Rail as their major sponsor.
The company, which is also the major backer of the region's premier football team the South Coast Wolves, has committed to a one-year deal.
But the administrators said they were yet to see a Deed of Company agreement.
Yesterday Richard Brien, of Nicols and Brien, said he was obliged to file the report in accordance with certain deadline requirements but did not rule out future proposals.
"Effectively it means because of the timeline in the administration process we are obliged to do a report and call a meeting and we didn't have a proposal at that stage," Mr Brien said.
Anyone wishing to put in a proposal could still do so.
A meeting was scheduled for April 9 but there was also the possibility of extending that deadline.
Since being placed into voluntary administration four weeks ago, the Hawks have significantly strengthened their financial position with close to 30 pledges of sponsorship.
The administrator's report said the losses for the year to March 2, 2015, were $565,160 but indicated it could have been much higher.
"Clearly if the business was to have continued to the year ended 30 June, 2015, losses may well have been substantially higher in the circumstances that game day revenue would have been largely non existent, the season having been finalised ... "
The report also noted that historically the company's trading losses had been largely supported by cash advanced under a "letter of comfort" provided by Wollongong Coal to essentially support its funding requirements. The letter of comfort was withdrawn in late November 2014.
On Tuesday, Hawks general manager Kim Welch said since administration the club had put itself in a "reasonably good position with the sponsorship and small business support we have gathered".
"We are now subject to the outcome of the next creditors' meeting and if we come through that second meeting we are looking forward to further community support," he said.