ADMINISTRATORS last night began the job of restructuring Rangers Football Club.
David Whitehouse and Paul Clark, of Duff and Phelps, who have been appointed co-administrators, will spend time trying to understand the finances of the club and getting to grips with what needs to be done next.
The pair are experienced insolvency professionals with dozens of years of experience and are expected to be neutral figures in the process.
Ken Pattullo, Scottish managing partner at insolvency firm Begbies Traynor, said: "An administrator has to be independent and is ultimately answerable to the court."
Creditors do have the ability to challenge actions of the administrators and in severe cases can ask for the removal of the person or persons appointed.
Following an appointment an administrator will typically take a period of time to familiarise themselves with the financial status of the business.
They are then faced with three main options.
The first is to try to restructure the company, which is Craig Whyte's preferred option as it would preserve Rangers as a going concern.
A Company Voluntary Arrangement (CVA), where creditors agree to accept a portion of what is owed to them over a period of time, appears unlikely to work given HMRC is the biggest unsecured creditor. However, the administrator would make the choice on whether to pursue a CVA.
Once that intention is announced they have to allow at least 14 days before the meeting with creditors would go ahead.
The second option is to try to find a buyer for the business.
This could be in the form of a transfer to a new company or persuading an individual or corporation to provide investment so the business can come out of administration.
With Rangers still facing a possible £49 million bill from HMRC, on top of the £9m announced yesterday, any buyer will need to have deep pockets.
The third scenario is for the administrators to decide there is no way to continue trading the business and to put it into liquidation.
A liquidator would then be appointed to sell off all the assets at the best prices possible in order to then redistribute the money to creditors.
Mr Pattullo said: "If a CVA cannot be agreed by the creditors then it is difficult to see any other alternative than liquidation."
For the moment, the players and other staff at Rangers, 256 full-time and 45 part-time employees according to audited accounts to the end of June 2010, will continue to be employed by the club. However, the administrators will be looking to cut costs.
Alison Gow, a partner at law firm Semple Fraser who specialises in employment law, said: "An administration is perceived to result in a better outcome than a liquidation, but ultimately football clubs are no different to any other business."
He said: "If they go through an administration process they either come out of the other side or they go into liquidation.
"The administrator goes in to assess how the business goes forward and that does often lead to redundancies.
"The administrator may decide they just don't need the same number of people to run the business but for football clubs one of the main assets is the playing staff. The administrator has to balance what will achieve the best outcome for the business, but I think it is unlikely that will happen without some casualties."
Any employees losing their jobs may only be entitled to statutory redundancy payments.
Ms Gow said: "If employees are made redundant they would be offered a package. It is a statutory requirement that the implications of redundancy are listed so that would typically be in a letter setting out what a redundancy payment would be.
"At the playing staff level of contract the statutory redundancy payment may not be all that attractive as it is a basic level of payment which bears little relation to a salary."
If a buyer was found, any staff contracts would transfer over through Transfer of Undertakings (Protection of Employment) regulations.
However, if the club was to be liquidated contracts of employment would be terminated, leaving players free to walk away.
Ms Gow added: "If the company goes into liquidation that does pretty much bring everything to an end. The contracts are terminated by virtue of liquidation."