How administrators can avoid redundancies short-term

There have been many questions about the unusual circumstance in football of Rangers going into administration but not making any players redundant.  It is possible, and not totally uncommon, for directors of a company in administration to arbitrarily choose to provide funds from their own resources to pay any chosen creditor, including staff. In football, players’ contracts of employment need to be with the club, but the source of payment can come from anywhere.

In this instance, Rangers Group, the club’s holding company, or any other body or person, could be in sufficient funds to provide the administrators with enough money to not only pay players, but to continue operating in a relatively normal state.  Rangers’ administrators have already suggested Craig Whyte has guaranteed to make-good wages due to be paid this week, although it was not made clear which entity would be paying, or the source of such funds.

Administrators will only be forced into player redundancies if they do not have sufficient funds available to see them through to the timely conclusion of negotiations with creditors, or if they are unable to receive binding undertakings from another source that they will step forward to pay players next month.

Various sources over the weekend suggested HM Revenue and Customs were prepared to extend generous time to pay terms to Rangers.  This club is owned by Craig Whyte.  While we all know what a stand-up guy Craig is, how likely to you think HMRC are to believe he will stick to a plan stretching out years into the future?  It’s just not going to happen.

I hear a ‘We’ll take a few years to pay too’ campaign is set to trickle through the SPL if HMRC agree to this one.  Better using the tax man as a bank than using an actual bank.

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