Insolvency, how they got here, what next

1099

I’ve been trying to think if there are circumstances where a company has appointed an administrator when they have been paying all debts when due.  Newco Rangers are, to the best of our knowledge, paying creditors when due and have enough cash to continue to do so until the anticipated arrival of cash receipts from new season ticket sales.  They are, therefore, also able to fulfil obligations to current season ticket holders to stage football games.

It may be advantageous to the club to call in the administrators, because we all know how this story ends, but before you ask an administrator to ‘do his thing’, you need to give him a job to do.  Right now a Newco Rangers administrator would be able to pay all creditors when due – and would have money left over.

Under these circumstances, an admin would have difficulty breaking the contracts necessary to reduce costs for next season.  Before a court would agree to appoint an administrator appropriate justification would need to be found, and I don’t see it, yet.  There may be as-yet unpublicised justification, but I suspect it would require a thoroughly creative, creative accountant, to produce it.

Season ticket sales for next season imposes an obligation to stage games all the way through to May 2015.  If the club have little or no chance of meeting obligations between now and then, the directors must recognise this fact when it formally becomes apparent, stop accepting season ticket money, and appoint an administrator to protect creditors’ interests, before they start to consume this cash to pay for day-to-day expenses.

This is the point administration would normally be considered.

There has also been a great deal of hot air about trading insolently and illegally.  Companies are allowed to trade while insolvent if they have a reasonable belief that they will be able to generate enough cash to pay creditors when due.  Right now, for Newco, this means they can continue to trade while season tickets are on sale.  Doing so beyond the renewal deadline, even in the face of terrible sales, is legally justifiable.

The same goes for claims of foul play over Graham Wallace’ pronouncements in December that his club had enough money to get to the end of the season.  It was simply wrong that Newco had enough money to get to the end of the season, but projections – any projections – are so caveat-dependent there is no way the police will do anything more than take a cursory look at the issue.  Whoever reported Wallace either doesn’t know the mechanics of projections or is simply trying to pee in the Bovril.  If you’re visiting Ibrox soon, avoid the Bovril.

Flying a kite, in the form of a proposed share issue in the autumn, will legally allow the directors to gobble up season ticket money between now and then.  If/when investigated following an insolvency event, directors can point to the £22m share issue in 2012 as an example of what they planned to do once the season ticket cash was gone.  In short, they can trade throughout the summer, until whatever money they bring in is spent, without fear of personal rebuke or liability.

I was reminded in an article in The Herald this morning of the critical move, made back in 2012, which brought the club to its knees today.  “The Rangers Supporters Trust urges fans not to renew season tickets”.

This stance was adopted in an attempt to force Charles Green to sell out to the Blue Knights group.  Green was forced to ditch his sustainable business plan, promise to spend big, reward his manager with a contract worth circa four times as much as the one on offer and slash season ticket prices.  The original plan was to pay players no more than £50k p.a., retain the manager on £200k p.a. and ask fans to back the future by buying tickets at full price.

Notwithstanding the limitations of the manager, Newco should have reached the Premiership with money in the bank from the IPO, while the original investors in the club, including Green, could have taken the long view, and avoided the unseemly haste to get their cash out.

They would have been a significant force to be reckoned with, Celtic’s guaranteed ticket to the Champions League qualifiers would have been competed for, for at least a season.  If you see Paul Murray, any other Blue Knights, or their performing puppets, thank them for all their work.

Big Picture: Find the lady

Keep an eye on the property assets.  The Rangers FC Ltd’s major creditor is also their only shareholder, Rangers International PLC.  After an insolvency event RIFC would be entitled to acquire property assets to compensate for their satisfied debt.  Once this happens they can jettison TRFC Ltd to its fate.  They can sit as landlords for as long as TRFC can pay rent, or use their assets for a mixture of landfill (Ibrox) and housing (Murray Park).

Big Picture: Fundamentals

While considering all these fast-moving events, don’t lose sight of the overarching fundamentals.  It costs circa £17m to operate Ibrox and Murray Park as football venues, before you employ a footballer or coach.  No one has suggested how any club in Scotland, with this level of infrastructure to support, is viable without regular Champions League income.

There is a working assumption in some places that a Rangers brand can phoenix indefinitely.  This is clearly not the case, a newco takes tens of millions of pounds and tens of thousands of people.  One of which will almost certainly not be available next time around, the other of which is in some doubt.  My money is on Sandy Easdale’s hunch, that this toxic bird will rise from the ashes only once.

Congratulations to Kris Commons on his enormously deserved Player of the Year award.  He and the magnificent Lisa Hague are a credit to the club, and to the values demonstrate so often.  As a player, Kris has been peerless; so valuable, so in tune with his surroundings, he could have been born wearing green and white hoops.

We have a few tickets available for the Supporters’ Association 70th Anniversary Dinner Dance this Friday at Celtic Park.  It’s always a great event, let me know if you would like to be there, celticquicknews@gmail.com

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  1. embramike supporting wee Oscar and Res 12

     

    ———

     

    Yep, fines are pointless but that’s what has been hinted at.

     

     

    Personally didn’t think it would be any different, no way UEFA were going to upset the Oil money clubs.

  2. My boss is Peter Principle on

    googybhoy ♥ we are all neil lennon

     

     

    20:20 on 28 April, 2014

     

    stairheedrammy

     

     

    20:09 on 28 April, 2014

     

     

    I know I know. I should ignore him

     

    And usually do but I had to respond when one of his fawning acolytes stepped in.

     

     

    Are you talking about me?

  3. Miller comin Oan?

     

     

    God Bless Him..

     

     

    Ah remember whit the Sevco did tae.. Poor Paul George.

     

     

     

    they Did Him ..Good.. or Bad… rather!

     

     

    Broke his Leg ..

     

     

    Miller ,is a Similar Tricky player as Paul Is.

     

     

    Like Ah said..

     

     

    A hope Hope God Bless the Lad..

     

     

    Kojo

  4. Hello Bern,

     

     

    Not any more – I left at the end of February, after none years there.

     

     

    I’m currently in North Cyprus, waiting for a work permit for Algeria.

     

     

    Are you in Baku?

     

     

    HH

  5. embramike supporting wee Oscar and Res 12 on

    the_huddle

     

     

    Sky Sports News ‏@SkySportsNews 7m

     

     

    Uefa offer Manchester City & PSG settlements for alleged breaches of financial fair play #SSN

     

     

    Says it all really – might as well make them stand in the corner for an hour

  6. Lennon n Mc....Mjallby on

    According to hunmedia Celtic scarves being burned in the away end.

     

     

    Classy,probably trying to recreate the feeling of the crematorium their old club went through.

  7. Bakubhoy

     

     

    I stayed in Wellesley Road ,Buckhaven ,just across from the junction with Omar Crescent.

     

    My parents and sister were on the committee at Denbeath Bowling club.

     

     

    TT

  8. Nesbit Sinks it..

     

     

    Great kid…

     

     

    Nice..

     

     

     

    Celtic 1 Sevco0

     

     

    Kojo

     

    Happppppppeeeee

  9. TT – my surname is Burt.

     

     

    Stevie Doig rings a bell from somewhere.

     

     

    I knew Aaron’s Grandad better than his Dad, but they were both great lads, as were quite a few of the Wellesley Inn Bears.

  10. Boyd, coming oan ..

     

     

    This Kid..is ..well.. a Kid..

     

     

     

    He is the Youngest in the Team..

     

     

     

    Sixteen?…mebbe.. Fifteen..

     

     

     

    But..

     

     

    He is a Guid Yin.

     

     

    Kojo

  11. My boss is Peter Principle on

    googybhoy ♥ we are all neil lennon

     

     

    20:31 on 28 April, 2014

     

    my boss is peter principle

     

     

    20:21 on 28 April, 2014

     

    Scroll back I gave you your reply.

     

     

    I asked you a question, we’re you talking about me?

  12. TT – please ask Paul for my e-mail address. One of my good schoolmates (Dougie McMillan) lived just up the road from you.

  13. Good Grief

     

     

    Been out to do the messages and came back in just in time to see the Young Celts score.

     

     

    Cue the medieval choir singing songs of hate.

     

     

    This must be what Armageddon sounds like.

     

     

    Where are the Focus group when you need them?

     

     

    HH

  14. Seems that they’ve missed us much, much more than some us have missed them.

     

     

    They really do identify themselves with this hateful bile.

  15. Bakubhoy

     

     

    I went to BHS.

     

     

    I know the Murphys from Kennoway .

     

     

    Mike lives in London ,

     

    Brian committed suicide a few years ago.

     

    Theresa lost her husband ( a terrific Celtic man from Glenrothes) a few years ago to cancer.

     

     

    The only Burt I know from Denbeath was obviously not you.

     

     

    Brian Burt ,who is an Orangemen and bitter Zombie, also like a bet and a game of pool.

     

     

    TT

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