[Archived] Our Debt

[Tom]

The Bollywood company is still listed in the list of VH group companies.

As far as I am aware. Mrs Desai intervened to wind it up and stop it losing family cash. I have heard this involved some form of administration.

It is not unusual in the film industry to keep a company in place which does nothing but receive fees relating to whatever residual percentage interest in old films revenues that are still coming in. I think that is what the Balaji Bollywood company is reduced to just now.

I don't know much about it or what it did I just know there were people working at the friendly game with Bala Entertainment and the logo on their back, I also thought it had gone by the wayside

[philipl]

Some speculation that Barclays had extended by two weeks deadline for the £10m payment. That falls tomorrow.

This would fit with the administration this week rumour which has gone round with some force.

However, the AGM is tomorrow and there has been no overt activity to raise cash rapidly so either Mrs D is so far removed from the reality of running a business in the UK and simply does not "get" what the bank is saying (possibly) or the end of the road is not this close (probably).

[Paul]

Can anyone explain the consequences of the Bank getting heavy please, apart from the financial issues? Are we at risk of a points deduction if we don't meet their demands?

The simplest thing is to compare it with a mortgage or credit card. If the payments aren't kept up the lender starts with friendly letters, then warnings till eventually the lender asks for the money or the security. Takes your house and sells it.

As I understand it with a bank and business ultimately the bank can call in the administrator to run the company, attempt a sale to repay the debt and if that fails close the business and sell off the assets. The bank will usually be a secured creditor and gets first shout at any cash that is realised. Though I believe for some strange reason football creditors have a higher priority, which I've never understood.

Other creditors are less likely to call in the administrator because with a lower priority they are far less likely to receive all or any of their money.

[dave birch]

The simplest thing is to compare it with a mortgage or credit card. If the payments aren't kept up the lender starts with friendly letters, then warnings till eventually the lender asks for the money or the security. Takes your house and sells it.

As I understand it with a bank and business ultimately the bank can call in the administrator to run the company, attempt a sale to repay the debt and if that fails close the business and sell off the assets. The bank will usually be a secured creditor and gets first shout at any cash that is realised. Though I believe for some strange reason football creditors have a higher priority, which I've never understood.

Other creditors are less likely to call in the administrator because with a lower priority they are far less likely to receive all or any of their money.

Or a bank wanting to lower it's exposure to a particular sector. I believe that something similar has happened at Everton.

As long as the business is meeting its obligations, then the bank would be foolish to call in the debt. It's only when there is a default, that the bank will move, and then there'll be a huge time lag between that and shutting down a business, in addition the costs of doing so are not inconsiderable. A bank will move heaven and earth to get a borrower back on the straight and narrow, as that is the cheapest option.

So, basically, it's a "last resort" scenario for a bank (or any lender) to create action on a borrower.

[EwoodDawn]

Or a bank wanting to lower it's exposure to a particular sector. I believe that something similar has happened at Everton.

As long as the business is meeting its obligations, then the bank would be foolish to call in the debt. It's only when there is a default, that the bank will move, and then there'll be a huge time lag between that and shutting down a business, in addition the costs of doing so are not inconsiderable. A bank will move heaven and earth to get a borrower back on the straight and narrow, as that is the cheapest option.

So, basically, it's a "last resort" scenario for a bank (or any lender) to create action on a borrower.

Sorry to display my naivety but I'm really not au fait with the business world. Would people like shareholders be likely to receive any info about this, perhaps at the AGM today, or do financial issues like this remain within a close circle at the club?

[dave birch]

Sorry to display my naivety but I'm really not au fait with the business world. Would people like shareholders be likely to receive any info about this, perhaps at the AGM today, or do financial issues like this remain within a close circle at the club?

Dawn, It's not in the best interest of the bank (in this case, Barclays) to foreclose on a business like the Rovers. The publicity would be sooo bad.

It's my belief (from having worked in institutions like banks) that they would rather have their money (for that is what it is) working for them with a minimum of effort. As soon as someone has a debt that is not current (obligations not being met), then it starts costing over and above the cost of the money to them, therefore reducing their margin.

From memory, Barclays have had a pretty big exposure to the football industry (not just the Rovers), so it would not be inconceivable that they would want to reduce the overall exposure in the premier league. Maybe they don't want to be splattered when the bubble bursts.

[Guest Rovers4Good]

Circus Venky's coming to a town near you!!!!!!!!!!!

[Random Bird]

Dawn, It's not in the best interest of the bank (in this case, Barclays) to foreclose on a business like the Rovers. The publicity would be sooo bad.

It's my belief (from having worked in institutions like banks) that they would rather have their money (for that is what it is) working for them with a minimum of effort. As soon as someone has a debt that is not current (obligations not being met), then it starts costing over and above the cost of the money to them, therefore reducing their margin.

From memory, Barclays have had a pretty big exposure to the football industry (not just the Rovers), so it would not be inconceivable that they would want to reduce the overall exposure in the premier league. Maybe they don't want to be splattered when the bubble bursts.

The bad publicity issue for Barclays is a pertinent one - especially as they sponsor the PL - imagine the adverse publicity of the PL sponsor forcing a PL club into administration.

However, its not just a clear cut case of a bank pulling the plug or not. There are options available to the bank which could include extending the line of credit in return for various conditions being met e.g. they may wish closer involvement in the administration of the club to ensure the ultimate repayment of the debt and/or to ensure proper financial management is maintained, as RBS did with LFC. I beleive it is unlikely that Venkys will be able to secure an alternative line of credit as corporate bankers are much more risk averse these days, so Barclays actions over the coming weeks may be key to the long term future of the club.

[Sparky Marky]

If everything was sold we could clear any debt and then start again in division one...might be better than this shyte...we have a good fanbase...get warnock in and we come again.

[technoprisoners]

Thank you all for the replies about what could happen if Rovers were to exhaust Barclays' sense of humour (a bank with a sense of humour?). Very interesting, and what is likely to happen to the Club if they don't make the payment(s) on the due date? It seems that there has been several extensions to the loan repayment deadline. There must come a point where the Bank steps up its involvement in the management of the Rovers to protect the assets. Is that "adminstration"? Would that incur a penalty deduction of points? I'm thinking that any loss of points means certain relegation from our precarious position, and the creditors would not want to precipitate that as their asset would devalue quickly.

Second question: if push came to shove, and the Club couldn't pay the players' wages (currently 80%+ of outgoings), would that trigger a similar sanction from the FA?

Thanks in advance.