How can a company, organisation or football club that has been in administration twice in recent years, be allowed to be over £3m n debt. They are playing a very dangerous game as another administration would surely mean the end.

But are they IN debt? They have £3 million of debts but so long as they are able to make the payments then they are not in debt. We are also a team who have loans etc so are we in debt?

But are they IN debt? They have £3 million of debts but so long as they are able to make the payments then they are not in debt. We are also a team who have loans etc so are we in debt?

Debt is Debt no matter how you look at it. You need sufficient income to service any debt and if your crowds start subsiding you could have a major problem!

"In debt" simply means they owe the bank any sum of money. Nothing else. Usually this means the outstanding balance of the loan or loans including accrued interest.

If they can't pay the interest, then the bank could foreclose on their security  and/or demand repayment of both the Principal sum lent by them plus the accrued interest..... then the borrower is both in debt and in deep trouble.

 

If the terms of the loan repayment are structured by way of a  monthly repayment of  principal, blended together with the payment of the accrued interest since the last payment of interest was made, then this is usually related to a long term repayment plan. UNLESS the bank has allowed the borrower to pay only the monthly accrued interest without the obligation to repay any part of the principal amount borrowed along with the monthly interest payment. -- in which case they have made sure that the security that they have taken over the borrower's assets is valuable enough to pay out the remaining principal amount of the debt  in the event of default of the borrower to repay as agreed .

 

However,  the option may be offered to a reputable and valued client to re-finance the debt with another loan on more favourable terms.  i.e. to pay-out and replace the first loan with a new one on terms more suited to, or agreeable to, both parties.

Otherwise it's likely that the bank will foreclose and sell the assets to allow for them to get their loan repaid. That could mean selling the structures of the park, or the ground on which these structures stand, or both.  Assuming, of course, that these assets have been legally assigned to the lender by way of security to cover the possibility of default by the borrower.

 

OR--the bank may call in the loan and, failing repayment in full, they could choose to activate their right to liquidate their security  after due notice to the customer of their intentions.(e.g. sell property, a high-end car, bonds or bank balances elsewhere all pledged as security.)

Also, the people who have signed Guarantees to the bank against the default of the borrower to fulfill his/their  obligation to repay the bank on the terms stated in the loan security documents,  may have to pay up. The bank is likely to call in the Guarantors to pay up first,  followed by the liquidation of the  secured assets of the company to repay the shortfall of what is left owing to the lenders.

 

It's a nasty business. AKA Rangers.

But are they IN debt? They have £3 million of debts but so long as they are able to make the payments then they are not in debt. We are also a team who have loans etc so are we in debt?

I think this is the sort of thing that was being said before their most recent administration along with " We have no bank debt." As caleyboy says debt is debt.

But are they IN debt? They have £3 million of debts but so long as they are able to make the payments then they are not in debt. We are also a team who have loans etc so are we in debt?

 

I don't believe ICTFC have any debts...in terms of loans...with anyone.  So I would say "No", we're not in debt.

 

The last time I checked, Ross County were in similar position to Dundee...although they do/did a lot of operating via 2nd and (and 3rd) companies so debts never showed on the actual club accounts, even though the businesses were connected.

 

It could well be that these debts (both clubs) may be guaranteed by others...but in order for those guarantees to be enforced the clubs would have to be in a position where they couldn't pay...i.e. administration/liquidation...so the guarantee protects the lender, but not the clubs.

 

The most disappointing thing with Dundee is that they had gone through all the pain of wrestling their club away from those who were running it in to the ground time and again.  They had fan ownership and a model to allow them to live within their means.  They then gave that all up the moment someone waved a few quid at them.  If it all goes t1ts up again, then you really can't have any sympathy.