Livingston Revisited

By on Aug 14, 2009 in Finance, Latest | 1 comment

Livingston’s financial collapse has started to turn into a bit of a soap opera with, as Gavin Saxton reports, the Scottish Football League having taken severe action against the stricken club.

Rob Freeman has already given some of the background to the ongoing saga at Livingston, but since then the situation has developed apace, leading to three clubs being moved between divisions three days before the start of the season, Livingston not playing any games pending their appeal(s), other clubs playing “provisional” fixtures, and the Scottish Football League left pondering a change to their rules to enable clubs to bypass unscrupulous owners.

Lower league Scottish football politics are something of a niche market. In the first instance, Livingston were finally taken to court by West Lothian Council for non-payment, principally, of the rent on the stadium. With no payment forthcoming and many other debts piling up, Insolvency Practitioner Donald McGruther was appointed by the court as Interim Manager, under the terms of the relevant Insolvency Act, as a prelude to full administration. Within a day or two McGruther had assessed the situation, declared that Livingston had no cash flow at all, no assets and would go under unless Chariman Angelo Massone sold his shareholding to the main interested party preparing a rescue package – a consortium involving former Cowdenbeath Chairman Gordon McDougall, former Dumbarton director Neil Rankine, and the Supporters Trust.

Massone is an extraordinary character and still didn’t seem to appreciate the gravity of the situation, refusing a final deadline and insisting he still wanted to resolve any problems himself. Accordingly McGruther met the SFL Management Committee on 30th July in a position of being unable to guarantee that the club would be able to fulfil its fixtures this season and the vultures gathered expecting their demise that afternoon. Although they were not yet in full administration, it was fairly clear the club were in breach of rule 76.2 relating to insolvency procedure, and although the SFL does not have an automatic points penalty as other leagues, they do have full discretion to deal with it as they see fit.

With McGruther now legally in charge of the club, Massone was locked out of the meeting, but members of the consortium were invited in to give an opportunity to present a case for the club’s survival, and with at least some degree of success the Management Committee made provisional agreement to a couple of things. Firstly, they agreed to consider a change to the rule against transfers of league membership, which would potentially allow Massone to be bypassed in favour of a new company even without his agreement to sell up: this would create a very uncomfortable loophole, but if the intention was to persuade Massone that they would do whatever was necessary to get rid of him then it was successful, as he accepted an increased offer of £50,000 for the shares he’d paid £1 for last year and disappeared back to Italy, though he remains a creditor for a larger sum for the money lent to the club over the past year. Hopefully with that out the way, there will now be no need to actually make the change to the rule that was threatened.

Secondly – and this has turned out to be the more controversial bit as the extent of agreement and the signals given are unclear – they also provisionally agreed to Livingston remaining a first division club, with or without a points deduction, in return for them lodging a bond of £720,000, intended to compensate other clubs in that division should they fail to complete the season, something McGruther was not in a position to promise wouldn’t happen in the absence of any CVA yet being agreed with creditors.

Over the next few days, it became clear that part of the decision was not universally welcome – whether or not Livingston were deliberately attempting to blackmail anyone with hints that the consortium would walk away and the club go under if First Division status was not assured, leaving one of the divisions to play the season with nine teams and the loss of revenue that this would entail, it was certainly perceived in some quarters that they were attempting to set their own terms in a rather heavy-handed fashion, while David Longmuir (SFL Chief Executive) was quoted as saying that demotion was “not considered” because the business plan was based on Livingston being a First Division club. Longmuir is normally an adept administrator, but this was an ill-advised comment and disagreement had been registered publicly by at least a couple of other clubs by the time McGruther met with the Management Committee again the following Wednesday.

Again, exact details of the meeting are unknown, but far from thanking their lucky stars for lenient treatment, Livingston were now unhappy with the bond, and seem to have indicated that they were unwilling (or maybe unable) to provide the necessary guarantees. Accordingly, following the precedent of Gretna last summer, the SFL relegated them to the third division with immediate effect, promoting Airdrie and Cowdenbeath, the respective play-off runners-up, to the First and Second Divisions respectively.

While the issue of the bond may have been the official reason for the decision, it seems likely that a general hardening of attitudes through the course of the week contributed to this apparent about-turn. Coming less than a week after it seemed that such serious penalties had been averted, it was a bit of a shock and, with three days to the start of the season (and Livingston having ten days to appeal) it threw the league into some degree of chaos. Revised fixtures were issued, the league waited as long as they could to see if the club would appeal but, on Friday lunchtime, they announced that all games would go ahead with the Airdrie, Cowdenbeath and Livingston fixtures being provisional pending any appeal.

Only late on the Friday afternoon was the appeal lodged, and Livingston announced they would not play any Third Division games in the meantime as it would prejudice their case. The SFL followed this later in the evening with a tersely-worded statement acknowledging that East Stirlingshire v Livingston would not take place, but making it clear this was not with their agreement and that the matter would be referred, once again, to the Management Committee. Airdrie and Cowdenbeath, both hotly tipped to come straight back down having spent a summer preparing for lives in lower divisions, both lost their games (we don’t yet know what happens to the three red cards they picked up between them should the games end up being declared void).

Meantime, we now have two fronts. Having obtained permission from all thirty clubs to dispense with the 21 days noticed normally required for a Special General Meeting, the SFL heard Livi’s appeal today (Thursday 13th); they voted 22-4 that the club were in breach of the rules relating to insolvency, and 16-10 to uphold the punishment and leave them in the third division. (The three affected clubs did not vote, plus Annan who remain associate members at present.) This time Livingston were quicker to indicate that they will lodge a further appeal to the SFA (as is their right) and that again they would not play in the Third Division in the meantime. So, at least one more postponement and two more provisional games – no-one now knows how long it’ll take to sort out. Separately we have the issue of failing to fulfil a fixture to be dealt with: the only other time this has happened in recent years, when a players’ strike meant Hamilton failed to play a game at Stenhousemuir in April 2000, they were hammered with a fifteen point deduction.

This doesn’t represent a direct precedent but it does suggest that it is a matter that’s taken very seriously. On the other hand, since it seems likely that the SFL would themselves have been prepared to postpone the game had the appeal been submitted earlier, they may decide it’s a non-issue – given the twists and turns of the last few weeks it’s almost impossible to try and second-guess them. The appeal to the SFA looks more of a forlorn hope – regardless of any variation in opinion on the severity of the punishment there seems little doubt that the SFL have acted within their rules and it would be extraordinary for the SFA to countermand them in such circumstances.

On the plus side, the takeover has now gone through and the consortium have confirmed they will go forward with the club in whatever division. While some suspicion has been aired in some quarters as to the reason for McDougall’s and Rankine’s involvement, both are football men and McDougall in particular is well-respected for his long association with Cowdenbeath. Providing they can agree a CVA it seems that Livingston do after all have a future, even if the immediate terms of it remain up in the air.

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    1 Comment

  1. What a load of nonsense.

    Liquidate them.

    Death to franchises.

    Meadowbank Thistle RIP.

    Martin

    August 14, 2009

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