| However, Ernst and Young, one of the leading chartered accountants in Edinburgh, firmly rebuffed suggestions they had been appointed to formulate a rescue package — yet. A spokesperson said, “It is a matter for the Court of Session and no appointment has yet been made by the court,” — an indication that a petition may be imminent.
Further, the Court of Session said that so far, no petition had yet been lodged.
While administration is essentially a rescue venture, whoever is leading the charge to keep the club in existence via delayed or rescheduled payment of debts, also has the absolute power to sell off its assets.
That could mean high-earning stars whose weekly wages are bleeding off the lifeblood of the club.
If Motherwell is any example, Dens fans must fear their cosmopolitan squad could be wrecked, with big earners such as Fabrizio Ravanelli and Craig Burley firmly in the administrator’s sights.
When the Steelmen went into administration, 19 of its players were sacked. With debts said to be in excess of £13 million, Dundee’s predicament could be even worse.
Administration is a legal device by which companies can get court protection to fend off creditors who otherwise could plunge a financially crippled club like Dundee FC into liquidation.
It means that instead of being forced to pay off debts at perhaps a fraction of their worth, a company could delay or reschedule payments while a rescue plan is formulated, with an asset fire sale a real possibility.
It is a fairly recent UK phenomenon, imported from the USA, but which has been favoured by the Government as a means of allowing companies to survive rather than go to the wall under a blizzard of debt claims.
However, its use in the Premiership was called into question when Leicester City was allowed to delay their debt payments, while clubs with equal mountains of debt, but who were determined to stay out of administration, were compelled to keep up their payments to creditors and the Inland Revenue.
Administration imposes a legal ban on creditors taking action against the company, giving it a breathing space to sort out its financial problems.
Creditors cannot ask the courts to put the company into receivership or into liquidation, both of which could sound the death knell commercially.
However, the powers available to an administrator could be double-edged.
He has to have a plan of rescue and survival, and not just that of preventing creditors taking action.
According to Dundee chartered accountants Henderson and Loggie, the administrator will come armed with a blank sheet of paper.
“Anything is possible, including the sale of any of the club’s assets. He has the power and the authority to make decisions and that could include the decision to unload the most valuable players,” they said.
The board, while it would not be dissolved, would be helpless to intervene.
The administrator would have the power and the power alone to make the decisions. He could consult with the directors and take advice from them, but he need not agree with them.
At the end of the administration period, the affairs of the club may then be handed back to the directors.
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