Rangers in Receivership?

When is a highly paid footballer not a highly paid footballer?

Answer: When he becomes an unsecured creditor of a company under receivership (or Administrative Receivership to give it its proper name).

Ranger’s players could soon have their contracts simply torn up by a court appointed receiver.

This COULD happen if Craig Whyte successfully applied for the appointment of a receiver.

Whether or not Mr Whyte applies for receivership will partly depend on whether or Rangers’ parent company, Rangers FC Group Ltd, holds the floating charge” on RFC’s debt.

Of course had the journalists at the press conference been properly prepared, Mr Whyte should have been asked this question.

Because they didn’t, a press conference that was meant to make things clearer has in fact left the situation as opaque as before.

This is because the floating charge is the key to understanding what is in store for Rangers.

It is perhaps useful to think of a floating charge rather like a mortgage on a house.

It protects the interest of the lender.

If you don’t keep up your payments then the bank can repossess the property.

It allows the interests of the holder of the floating charge to be placed ahead of the other creditors including, for the most part, employees.

Under Scottish receivership law that will apply to Rangers, employee contracts are a one-way bet that favour the major secured creditor, in this case the employer, Craig Whyte’s Rangers.  If Rangers go into receivership, the decisions over which players would be remain employees of the new company, and who will simply have their contracts shredded, would be taken out of the hands of players.  If a receiver, acting on Whyte’s behalf, wants to sell a player to another club, the player will be under severe pressure to agree to any deal or face being left out of contract.

Is it now possible to discern Whyte’s plan for Rangers?

If he is successful in having a receiver appointed on his behalf then he, as the major secured creditor, would be at the top of the pile.

The Receiver would then run the club on behalf of Mr Whyte’s company Wavetower.

The Receiver could, if he/she deemed it to be in the best interest of the main secured creditor, tear up player’s contracts. The players would, in practice, only be entitled to statutory redundancy pay which amounts to a sum unlikely to put petrol in Kyle Lafferty’s Bentley!

With Rangers under the control of a Receiver the players would join the long queue of unsecured creditors and would receive nothing from this position.

Now with question marks over Rangers’ future solvency being discussed in open court it will become increasingly unlikely that any company will want to do business with Rangers on anything other than a “cash up front” basis.

The timing of the press conference this week was not, perhaps, of Mr Whyte’s choosing.

If nothing else the publicity over the last few weeks has helped focus attention on the economic health of the club.

The questions that should be asked in the coming weeks are:

“Does the company have enough cash to get by until January?

Will the club have to sell players during the January window?”

The news that Martin Bain was successful in having £475,000 arrested means that Rangers cannot touch around £712,000 of their money for the next 14 weeks.

With these cash flow issues building up, perhaps the timing of an application to appoint a receiver is really out Mr Whyte’s hands.

Of course this potential problem for Rangers’ players is something that should be exercising the players union.

I hope that they are already on the case and are fully aware of this danger to their member’s interests.

As for the many unanswered questions about the Whyte regime, it is time for the hack pack in Scotland to realise that journalism means digging for stories and not forming an orderly queue for a press release and a free mutton pie.