Wednesday, 30 May 2012

CVA published for Glasgow Rangers

It doesn't look like a great proposal.  Click here for the document. 

The total unsecured debts amount to £55m and the funds available for unsecured creditors amount to just £5m.  This represents less than 10p in the pound.  Also there are lots of caveats on the total debts.  HMRC debt amounts to a minimum of £21m and of course it could go up to £79m pending the outcome of the tax tribunal.  HMRC will probably reject the proposal as the dividend is too low and it is no fan of football clubs.

If it is rejected it will not be anything to do with the CVA mechanism not being fit for purpose but simply that the creditors have not agreed to the proposal.  Offering 10p in the pound, but it could be even less, is not very attractive.  Normally CVAs are closer to 30-40p in the pound and they generally offer better returns than administration or liquidation

It is unlikely that the administrators at Duff and Phelps will end up getting paid all their fees if the club ends up ultimately in liquidation.  The business has been trading at a loss and there is a likelyhood that there will simply not be enough funds available.

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