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NCR Files Objection To USA Rugby's Reorg Plan

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NCR Files Objection To USA Rugby's Reorg Plan

Are USA Rugby and NCR part of the same entity or not? There's the question.

National Collegiate Rugby has filed a limited objection to USA Rugby's Plan of Reorganization, which is a key step in making it through the bankruptcy process.

The objection was filed in time for today's objection deadline, with the Plan of Reorganization hearing date set for a week from today (August 24). Goff Rugby Report has obtained a copy of the filing in US Bankruptcy Court in Delaware. 

The objection leans hard on the Ted Stevens Olympic and Amateur Sports Act, saying that USA Rugby's authority in the game is important but limited. It is not especially clear why NCR stated this. It is well documented that NCR does not believe that USA Rugby can control who NCR plays and when. However, that has not been stated in a court record, so it could be that spelling it all out: NCR is an independent sports organization, USA Rugby only has jurisdiction over international competition, NGBs and other amateur athletic competitions would be guilty of anti-trust violations were it not for the ted Stevens Act giving power to the US Olympic and Paralmypic Committee, and that an NGB cannot extend its anti-trust-immune power just because world governing body says so. 

None of that has a direct effect on the bankruptcy proceedings, But NCR also says USA Rugby is required to "coordinate" with NCR, and that's where the argument lies. USA Rugby and NCR (then NSCRO) entered into an agreement whereby USA Rugby would accept dues from NCR teams and players, and USA Rugby was supposed to send back $55,000 which basically paid NSCRO for running the small college championships.

USA Rugby haven't made their payments since February, and NCR says USA Rugby owes them that money. (This is not in dispute; USA Rugby has already stated they owe NSCRO/NCR money.) However, NCR has made two key statements:

1. They don't like USA Rugby's plan, and while the filed objection gives no specifics, it says "NCR has concerns with the information supporting the Plan and the Debtor’s projections supporting the plan as well as a lack of detail on their go forward costs." (sic)

Essentially, NCR is saying that USA Rugby's plan is a bit of a moving target and they are using that to imply the whole plan is bad. Sources close to the process say NCR has been in possession of the specifics of the go-forward plan for months.

2. NCR wants the money they're owed, which (like almost all the other USA Rugby debt) is unsecured, to be reclassified as an administrative expense claim.Adminstrative expenses are normally defined as expenses that are necessary for preserving the in-bankruptcy organization—stuff like pay for key personnel, the electric bill, taxes, attorney fees.  While secured debts and superpriority claims are paid first and second, administrative expenses are paid before the rest of the unsecured claims. 

But to get that status NCR has to prove that it's an essential part of USA Rugby's business—USA Rugby could not have made it through the last few months of bankruptcy without them.

The two largest creditors in this bankruptcy, JPMorgan Chase and World Rugby, have not objected to the USA Rugby's reorganization plan. 

If an objection is filed, the creditor is generally required to show proof that the claim us valid. Then it's a case of applying state law.

(source for that explanation: American Bar Association)