Look the other way: fixed and floating charges


Yesterday Graham Wallace, Norman Crighton and Sandy Easdale offered to giving a legal undertaking be security would not be given over Ibrox and Murray Park in return for a loan.

Security over a property asset is only one way for lenders securing that asset, it is not the most popular, or even necessary, for the lender to control assets.  More commonly, a lender will require a floating charge over the assets of the company.

A floating charge ‘floats’ over all assets of a company until it is discharged by full payment, or it converts into a fixed charge over whatever assets the company has at that point in time.  This is usually due to a payment default, but can also be triggered by a weakening in one of the company’s trading indicators (say, poor season ticket sales).  A company can only issue one floating charge over all their assets at a time.

If you get a bank loan for a value which is significant to your size, you’re almost certain to sign over a floating charge over the assets of your company, no matter how good a trading record you have.  This is true for Celtic and Manchester United, and would absolutely be true for Newco Rangers.  Stakeholders at Celtic and Manchester United would not bat an eye at this, as there is zero chance of them defaulting.

It would simply not be possible for Newco to secure a significant amount of conventional borrowing without granting a floating charge.

With the floating charge in place, no other creditor can step forward and make a claim on the assets until the secured creditor is satisfied.  In many circumstances, lenders will prefer a fixed charge, as it prevents the borrower from selling key assets before an insolvency event.  With a floating charge, Newco could still sell Ibrox under the nose of the lender and fans alike.

In the event of an insolvency event, the floating charge becomes a fixed charge over whatever assets the sheriff officers can find.  In terms of Newco Rangers this would mean the stadium, training ground, the bike, loving cup, a hundred weight of marble, balls and stripes.  Ebay would be interesting when that lot was uploaded.

Perhaps this is why Celtic have hidden Lennoxtown up a country lane.  “No training ground here, mister, it’s just a field.  I wouldn’t take that car across those potholes.”  Peter’s not daft, you know.

For Newco, giving a legal obligation that the company will not provide a fixed charge over property assets is, quite literally, not worth the paper it is written on, without also committing not to provide a floating charge over all the company’s assets.  It would be “We promise not to give security over only some of our assets, if we give security, it’ll be for everything”.

Legally prohibiting your company from providing a lender with a floating charge also prohibits you from accessing conventional lending.  It would be ludicrous, and could only be considered if the alternative would bring the wolf to the door immediately, in other words, it might bring in season ticket money, but it would ensure an almighty crash as soon as the ticket money is consumed.

For well over a decade the various episodes at Ibrox have been an exercise in making people look the other way while dirty deeds are done. Still, the world’s Gullible Champions show no sign of figuring out what’s going on.  After season ticket money is banked, keep your eye on the floating charge.

The fate of whatever football team plays at Ibrox was set in a firm direction when Rangers incurred unsustainable debts.  As a consequence of this, their majority owner sold his shares to a liquidation expert.  The train was in motion long before May 2011.

Instead of asking Rangers International for a meaningless commitment, an acknowledgement of the situation should be made.  Reality is:

Key assets cannot legally be put beyond the reach of creditors.

The directors must legally look after the interests of shareholders – or be liable for their losses.

The club has a massive trading deficit to fill next year, the year after, and probably in many subsequent years.  Estimates of this being between £30m and £50m only acknowledge the next few years deficit.

There are no good choices now, only less bad ones.  It would cut ‘Rangers’ fans to the core to become tenants paying a high rent for the use of Ibrox, but flogging this asset might secure them enough cash to reach top flight football – and there is nothing whatsoever fans can do to blackmail the club into retaining this asset.

Whether they consider Newco to be the same club or not, future ‘Rangers’ branded teams will be nothing like those of the past.  There is a possibility they will have a team to support, but it will not be a Champions League team, and Ibrox might not even be the best place for it, a St Mirren Park-type venue, packed out every week, would at least allow them to pay their bills.

The Sevilla keeper moved.  Three referees watching.  Three referees!  Two on the line, whose only job was to check if he moved!  Last night I considered corruption was at play but there is another possibility.  Calling out the keeper was a huge moment for the assistants, each of whom may have preferred one of the other two referees make the call.  It would have been a huge call for the main referee, too, but he could have deferred to his assistants, who were in prime position.

Without clear responsibility, all three were frozen in silence.

Tommy Gemmell is on CQN tomorrow from 13:00 – 16:00.  Tune in and have a ‘chat’.  You can order his autobiography, All the Best, due out next week, from the link below.

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  1. What is the Stars on

    Thanks Fleagle,enjoyed the fun



    Got word for Longhousecross in the 5.40 at Punchestown so will go with that as my nap

  2. Bada Bing, I’m confused … last week’s selection below…



    !!Bada Bing!!


    12:31 on 10 May, 2014


    Granville Island 5.15 Haydock



    6th 13 3 Granville Island (IRE) Jennie Candlish 7 11-11 S Quinlan 9/1


    Held up in rear, took keen hold, headway approaching 4 out, shaken up and no impression from 3 out, jumped left 2 out opened 7/1

  3. !!Bada Bing!! on

    Fleagle – cancel my moan,talkin pash.Mine is a NR so Monsieur Chevalier 2.40 Newbury

  4. !!Bada Bing!! on

    Fleagle- sorry for wasting your time mate,thanks for your efforts again this season.HH

  5. ....PFayr supports WeeOscar on

    Well I’m burst already …



    Best of luck to all …..even those that’ll do me on the line




  6. 16 roads - Celtic über alles... on

    Many thanks Fleagle1888.



    Congratulations to whomever wins the competition, it will be well deserved.



    I’d be delighted if a just broke even, so no long shot today.



    15:40 @ Newbury – Verrazano – NAP!



    Good luck everybody.



    Slan. :)

  7. tommytwiststommyturns on

    Great winner, Cathal…!


    Mines got gubbed, so I’m out. Good luck if you’re still in contention.






  8. CQN Saturday Naps Competition : FINAL results & standings



    Cathal was the solitary winner this week (Front Page News @20/1)…



    …but the CQN Naps glory goes to PF Ayr with 11 winning naps over the course of the season, and +12.6 pts profit.



    Unlucky to Rockon, BMCUWP who finished in the runners up places !






    +£12.60 PF Ayr (11)


    +£11.88 Rockon Neil Lennon (9)


    +£11.38 BMCUWP (7)


    +£10.50 tommytwiststommyturns (4)


    +£ 8.50 Cathal (5)


    +£ 5.50 valentinesday (8)


    +£ 0.00 leftclicktic (7)


    -£ 2.63 Som mes que un club (6)


    -£ 4.50 Bada Bing (5)


    -£ 4.75 16 roads (4)


    -£ 7.75 green T (7)


    -£14.00 What is the Stars (3)


    -£14.20 unionbearBhind (4)


    -£14.80 voguepunter (3)


    -£15.75 El Madrigal (4)


    -£16.00 BULL67 (4)


    -£16.00 fleagle1888 (4)


    -£19.20 Sponsored by Cheetah (4)


    -£22.75 Kilbowie Kelt (4)


    -£26.50 twists n turns (2)


    -£30.25 Che (2)


    -£32.75 MHARK67 (2)


    -£34.94 Burgas Hoops (2)



    *No selections (wk 39) : Burgas Hoops, Che, El Madrigal, Mhark67, Som mes que un club, Sponsored by Cheetah, twists n turns.



    See you all next season…..



    Cheers, fleagle1888