Hamilton Accies insolvent, declares judge

It has raised questions about the financial standing of the club, who are currently lying in eighth position in the Clydesdale Bank Premier League, eight points clear of relegation.

They play Rangers at Ibrox tomorrow in the Scottish Cup quarter-final.

Papers submitted to the Court of Session by Hamilton show the club owe £1,639,463 to creditors including directors and the providers of affiliate loans totalling £1.1m, which they say are not expected to be repaid in the foreseeable future.

Mr McCormack is claiming nearly £100,000 from the club for breach of a two-year contract he claims he signed when appointed as assistant manager.

Having given up his full-time job as Albion Rovers manager to join Hamilton, he was axed for alleged gross misconduct just two months later.

Lord Carloway said Hamilton Accies have conceded that Mr McCormack has a prima facie case against them, adding there "is no doubt" that the club are "absolutely insolvent, in the sense that their liabilities well exceed their assets".

He said: "Their continued existence must depend, as the docquet (note) on the accounts states, on the goodwill of their creditors.

"Whatever the state of that goodwill may be at present, it is difficult to argue that there is no risk that the pursuer's decree, were he to secure one, will be not be prejudiced or defeated in the future by what is admittedly absolute insolvency."

Companies House data shows the club's debts rose by 24% in 2007, and Lord Carloway said accounts produced reveal that the defenders have "very little" by way of assets.

The latest accounts, for the year ending June 30, 2007, contained the note: "The company is dependent on the continuing support of its creditors, all of whom have intimated their willingness to provide such. Should any of its creditors fail to provide this continuing support, it is unlikely that the company could continue as a going concern."

The club's New Douglas Park stadium is owned by another company, which leases it to them at a cost of £60,000 a year.

Hamilton also have a historical debt of £275,000 to the tax man. The club have an agreement to pay the interest only on the debt quarterly, and had hoped to write off a "substantial portion" of it this year.

They has £58,342 in a current account and £200,000 in Treasury Reserve with the Royal Bank of Scotland.

The club said the bulk of their debt related to a personal loan of £950,000 from chairman Ronnie MacDonald, who owns more than 90% of the shares.

The club have told the court: "He has no intention of demanding payment so as to prejudice the club that he owns."

When contacted by The Herald yesterday, Mr MacDonald insisted the club's finances were in a "sound" state and that he had no reason to seek return of cash he had lent.

The legal documents presented by the club claimed that they had an annual turnover of around £2.5m and enjoyed "healthy revenues, which have been very materially increased by their promotion to the Premier League".

The club argued that a "large margin of insolvency may be consistent with a sound trading position".

However, Lord Carloway concluded: "It is impossible to predict what their future financial position may be, dependent as it is on the goodwill of not only Mr McDonald, but HM Revenue & Customs.

"In these circumstances, the court cannot find that it is no longer satisfied that the requisite risk exists."

The £40,000 security is to come from the club's slice of the gate money of a Co-operative Insurance Cup match against Rangers in November last year.

Mr McCormack, known as "Cowboy" to fans, says he was on a salary of £40,000 per year plus a £10,000 bonus should Hamilton stay in the SPL.

Hamilton dispute this, saying he was on £2500 per month and that the contract was not for more than one season.

They claimed Mr McCormack had been moonlighting as a scout for a First Division club.