Various suggestions have been flying about teh Internetz regarding the possibility that Sevco Scotland Ltd’s team ought not be allowed to play under the name of Rangers.
This is suggested to arise from differing sources.
Some say that calling the team “Rangers” will make it a “phoenix company” and as such it would be illegal to use that name.
Others hint that HMRC would prevent the use of the old team name.
It is regularly voiced that HMRC did this with Farsley Celtic, an English non-league team which, as the story would have it, was blocked from reforming under the name Celtic.
In fact the ownership of the club had planned a name change prior to insolvency, and there was no HMRC involvement in the new name being chosen as Farsley AFC. This has become an urban myth which, like all such stories, has a life far beyond reality.
There are also rumours that calling the team “Rangers” would allow creditors of the Rangers Football Club PLC (RFC PLC) to pursue Sevco Scotland Ltd for payment of debts.
It has been alleged that BDO, who are soon to be appointed as liquidators of RFC PLC, have stopped, or will stop, use of that name.
As well as Farsley Celtic, some suggest that Darlington’s situation from last season provides a precedent, as the English FA did insist on a name change for the club, as a result of its decision that the “rescued” Darlington was not a continuation of the previous club.
“The Quakers were relegated four divisions following the Football Conference’s decision to deny entry after a breach of operational rules. The ruling means the club will now be forced to change their name under the circumstances of the takeover.
Darlington FC were placed in administration by former chairman Raj Singh in January 2012, with DFC 1883 Ltd to save the club from liquidation and ensured it would complete the 2011-12 season.
However despite the group’s efforts to acquire a Company Voluntary Arrangement to allow the club to come out of administration the bid was unsuccessful. That failure to acquire a CVA meant the Football Conference refused DFC 1883 entry into their divisions.
In addition DFC 1883 Ltd bought assets from the football club and set up a new holding company, putting the former club into liquidation.
The FA ruled that the club be demoted to step five of the pyramid, and as the former club no longer exists would need to change their name.”
Whilst there are similarities between the FA rules and those of the SFA, the situations are not analogous. The basic reason for this is that the SFA has shown no inclination to treat The Rangers FC, owned by Sevco Scotland Ltd, as anything other than a continuation of the old team.
What about phoenix companies?
Section 216 of the Insolvency Act 1986 helps us with that issue. The relevant parts of the section are as follows.
Restriction on re-use of company names.
(1) This section applies to a person where a company (“the liquidating company”) has gone into insolvent liquidation on or after the appointed day and he was a director or shadow director of the company at any time in the period of 12 months ending with the day before it went into liquidation.
(2) For the purposes of this section, a name is a prohibited name in relation to such a person if—
(a) it is a name by which the liquidating company was known at any time in that period of 12 months, or
(b) it is a name which is so similar to a name falling within paragraph (a) as to suggest an association with that company.
(3) Except with leave of the court or in such circumstances as may be prescribed, a person to whom this section applies shall not at any time in the period of 5 years beginning with the day on which the liquidating company went into liquidation—
(a) be a director of any other company that is known by a prohibited name, or
(b) in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of any such company, or
(c) in any way, whether directly or indirectly, be concerned or take part in the carrying on of a business carried on (otherwise than by a company) under a prohibited name.
(6)References in this section, in relation to any time, to a name by which a company is known are to the name of the company at that time or to any name under which the company carries on business at that time.
The first thing to note is that there has to be a company in liquidation. Rangers Football Club PLC is not yet in liquidation. It is likely to happen soon, but the restrictions under s216 do not apply until it does.
The section does not apply to the company, or to the company name, but instead to a person who was a director or shadow director of the liquidated company in the 12 months prior to the liquidation.
In relation to such a person a name is prohibited if it was the name of the liquidated company or so similar as to suggest a connection.
In that event the director or shadow director of the liquidated company cannot be involved in or connected with a company going by a restricted name fir a period of five years. The court can over-ride this restriction where justified.
To use the present example, none of the following gentlemen would be allowed, I submit, to have involvement in a company called “Rangers” “Rangers Football Club” or “Rangers FC” for the next five years from the date of liquidation – Dave King, Craig Whyte, Andrew Ellis, Phil Betts, John Greig, John McClelland and Donald McIntyre.
The latter three would have, I think, very good grounds for a court approving their involvement, the first four less so.
Matters are complicated by the fact that Mr Whyte’s holding company was called the Rangers FC Group Ltd. How would this overlap with the former Rangers Football Club PLC?
Thankfully I do not need to answer that.
Instead, as long as none of the people named above are connected with Sevco Scotland Ltd there is nothing to stop that company trading as The Rangers Football Club, nor to stop the changes of name due later this week at the instance of Duff and Phelps.
Sevco Scotland Ltd bought the rights to use all of the trademarks, names and intellectual property of Rangers Football Club PLC from Duff and Phelps. They can therefore use them.
Even if BDO try to unravel the purchase of assets by Sevco Scotland Ltd on the basis that it was a transaction by way of a “gratuitous alienation” (which they may or may not do) it would require a court order to prevent the use of the name “Rangers”. I do not see such an application as likely, even if BDO do take such action to reduce the sale.
Finally dealing with names, it seems that some Rangers fans are unhappy that media sources were referring to their club as “The Rangers FC” and placing them, alphabetically, at the bottom of SFL3.
It seems that the use of that term, rather than simply “Rangers” was being treated by some as an insult.
But Mr Green declared that was what the club was to be known as. That is stated to be the trading name of Sevco Scotland Ltd. It will be the company name after 31 July.
“The Rangers Football Club, a trading name of Sevco Scotland Limited (No SC425159) Ibrox Stadium, 150 Edmiston Drive, Glasgow G51 2XD” as stated on Rangers.co.uk.
Maybe some fans of The Rangers Football Club should pay more attention to what the Chief Executive has to say!
To conclude, “Rangers” can play as “Rangers” and wear the old badge and crest and strip. No one can or will stop them doing so.
Whether in fact, law or football terms “The Rangers Football Club” this season is a continuation of Rangers from last season is a question for debate but one on which there will never be universal agreement. I therefore won’t try to resolve it for now.
Posted by the Paul McConville