It’s pretty understandable that this news brought some concern to Blues fans.
After all, the words “winding up order” are often associated with clubs in crisis, as we have seen in recent times with Bolton Wanderers, Bury and Macclesfield Town.
The most important thing to iterate at this point is that the petition was immediately dismissed as the debt had been paid, and that there is absolutely no implication that Birmingham City are in financial trouble.
However, the very fact that it got to court is worrying.
There’s precious little information available about how much debt was owed to HMRC and what it was specifically for, and in honesty I don’t see that coming out.
This makes it hard to understand why Blues got to the position where the taxman started proceedings to send them out of business.
From my limited understanding of how business works, the last people you want to annoy as a company is HMRC.
It’s the duty of HMRC to actively pursue tax being paid, and while they’re not writ happy they will always end up taking companies to court if things go on long enough.
I don’t really want to speculate as to what has happened in this case; the only thing that is firm in my mind is that the easiest way to put your company firmly under the scrutiny of HMRC is to allow these sorts of situations to develop.
The problem as I see it is that the winding up petition isn’t an single aberration; instead it is an indicator of where Blues are as a company.
A simple credit check on the Blues using publicly available information from a credit reference agency confirms that Blues have had two recent County Court Judgements (CCJs), of which one is satisfied.
CCJs aren’t an uncommon occurrence in business. While they can be an indicator of bills not being paid, simple inability to service debt is not the only reason to rack up a CCJ.
For example, a company might be in dispute with a supplier. Rather than pay the supplier, a company withholds their payment as they look to resolve the dispute. Eventually, the supplier takes them to court, and a judge decides if the money is owing or not – and if the supplier wins, they obtain a CCJ.
CCJs are a real stain on a company’s credit record – but if they are paid off within one month of being made, it is possible to make an application to get the judgement wiped from your record.
However, if the CCJ is not satisfied in full within this time, they remain on a credit record for six years.
Blues have a CCJ for £2,367 which was dated 18 June. While it was satisfied in full, Blues took about six weeks to do so and as such that CCJ remains in place until 2025.
There is another CCJ for £1,197 which is dated 26 November. If that one isn’t paid off by Boxing Day, the same thing will happen.
Naturally, the credit score from the credit reference agency I used to get these details shows Blues are a high risk to give credit.
The question therefore is to why Blues are in this situation.
As I see it, there are two reasons why Blues could be picking up CCJs and having to deal with winding up petitions.
The first reason would be that Blues don’t have any cash.
I will repeat that I simply do not believe that is the case. The club have been bullish in bringing in free agents of late and the noises behind the scenes are that they plan to do some decent business in the January transfer window.
The second reason is that Blues are just not paying bills on time.
Having worked in small business for many years, I can easily understand this. Every business I’ve ever known has paid bills as slowly as they dare – simply because it makes sense to hold on to cash as long as possible.
However, there is a difference between being a stingy payer and just being incompetent.
The late payment of the CCJ doesn’t strike me as the actions of a company that is acting competently.
While the board of Blues have rarely spoken except to very occasionally respond to jibes from fans and former managers on Twitter, I think this is a good time to put some fears to rest.
After all, we don’t want to think we’re in the situation again where we have directors coining it in ‘pocket expenses’ while everything else suffers.