Day 4 in the Big Broxie House – Rangers (In Administration) – Why HMRC Let Duff & Phelps In + No Bail Out

 

Lots of stuff today! The papers are full of it! (News I mean!)

Are you sitting comfortably, then we’ll begin.

 

The Rangers Website + Why Let Duff & Phelps Be Appointed

Let’s commence with the position regarding the notice on the website, or lack of it.

One of my readers, Joseph, posted the following comment here.

“Re Paragraph 45 of Schedule B1 to the Insolvency Act 1986, “when a company is in administration, … the company website must specify that the company is in administration and who the administrators are. It is an offence by the administrators, officers of the company and the company not to do so.”

I checked the website yesterday (Feb 16) and there was still no mention of the administrators. Intrigued by this I emailed Companies House for an explanation. The following is the reply:

THE RANGERS FOOTBALL CLUB PLC – SC004276
According to company records the Appointment of Administrator form has not yet been registered. Therefore there are no details on file yet of who has been appointed as Administrator.
Regards

HELEN MORGAN,
Liquidation Section”

There is a 7 day time limit for notifying Companies House, and the administrator is required to publish a required notice as soon as reasonably practicable. Today’s Edinburgh Gazette contains the Statutory Notice. You can find the extract from the Gazette here – Edinburgh Gazette notice of Administration Rangers

The notice confirms that the appointment of administrators was by “Notice of Appointment”. This means that it was Rangers board (Messrs Ellis and Whyte) who appointed the administrator. An application for administration by the company cannot be granted if there is a court application for an administrator outstanding. This proves that HMRC’s priority this week was to get an administrator in on Tuesday. The identity was not the most important thing; it was the fact of an administrator that mattered.

As we saw today with Portsmouth, if HMRC want to block an administrator’s appointment, it can do so.

As HMRC got their application to court before Rangers lodged its notice of appointment, HMRC could have insisted. However that would have left them with the prime responsibility of ensuring an ongoing Rangers was funded, and I suspect Mr Whyte would have been less than co-operative with HMRC.

HMRC were also awarded the expenses of the application. The judge, Lord Menzies, saw this therefore as an appropriate application.

HMRC managed to avoid the situation where their appointed administrator might have put Rangers into liquidation, with the potential political fall out that might have caused.

To appoint an administrator, the directors need to make a sworn declaration that the company is, or is about to be, unable to pay its debts. It is an offence for a person to make a declaration which is false or which the person making it does not reasonably believe to be true.

The fact that Mr Whyte was not suggesting that some cataclysmic event, such as the FTT(T) declaring, put the club in a position where it could not pay its debts, and that he had appreciated its difficulties from early in his tenure, seems to suggest that there will be very serious questions about when he realised that the company was insolvent. Especially if there is a large loss of tax to HMRC, it is likely that there will be a close examination of whether or not there was any trading whilst insolvent.

As the “old board” were concerned about this, took advice about it, and decided that the way to obviate the risk was to “ring fence” season ticket income, then one wonders what advice Mr Whyte had to the effect that these would not be concerns, even though he was selling off 4 years worth of season tickets at one go for running costs, and putting, it would appear, the funds other than into Rangers!

I am sure however that his activities were motivated by nothing other than sound advice.

 

No Bail Out says Scottish Sports Minister

Scotzine.com went direct to the Scottish Sports Minister, Shona Robison, after her comments, echoed by First Minister Alex Salmond, which seemed to indicate Scottish Executive support for Rangers in its present plight.

Amid frantic sounds of backtracking, Ms Robison indicated that no public money would be provided to bail out Rangers. She emphasised her concern for jobs at Rangers, and also confirmed that the company should pay its dues.

She also commented that it was far too early to predict the outcome of the process. I wonder if she said that to the administrators, who seem very confident in what they have to say!

It was also thought that any government assistance would have been illegal under European State Aid rules, and also that it would have breached the rules of UEFA and FIFA in relation to Government intervention in football, which is not something the ruling bodies of world football appreciate.

 

More to follow –

re Mr Whyte suing the BBC;

How newspapers work;

The administrators’ latest statement; and

Mr Whyte’s cri de couer.

HERE!

SOON!

 

 

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43 Comments

Filed under Administration, Craig Whyte's Companies, Insolvency Act 1986, Rangers

43 responses to “Day 4 in the Big Broxie House – Rangers (In Administration) – Why HMRC Let Duff & Phelps In + No Bail Out

  1. campsiejoe

    Paul
    You really have stepped up to the plate with your recent articles
    A question for you though
    What, in your opinion, is the likelyhood of HMRC going to to court to have Duff & Duffer removed ?
    Keep up the very good work

    • TheBlackKnight

      They may be doing that themselves with the recent faux pas of trying to sign a player (IN ADMINISTRATION)

      Oops!

      • I have the Cousin “signing” on my list of 8 topics arising from yesterday alone that I still have to write about!

        I wonder if the administrators will be doing the half time draw at Ibrox today? With them supplying the prize money too?

  2. steven doyle

    A brilliant blog which helps me 2 understand what’s going on ,the truth

  3. TheBlackKnight

    http://www.guardian.co.uk/football/blog/2012/feb/17/scotland-media-rangers

    Paul (and others) In case you missed it!! Please circulate, email , tweet, trend!!

  4. Aurelio Zen

    Paul, I love your work. There is a clarity, succinctness (I know, a word, not often said about you) and readability about the way you tackle stuff which normally bores the pants off of me. Between you and rtc I have developed an unhealthy addiction to law and accountancy which is threatening marital harmony and my sleeping pattern.
    When this thoroughly enjoyable farrago is over (though given the cast of villains waiting in the wings that could be a very long time) I will be at a loss.
    Keep up the good work.

  5. Tommy

    HERE!
    SOON!
    Now where have I seen that postscript before?
    Excellent stuff again, Paul. I can’t wait to read your thoughts on the long awaited entrance of Sue, Grabbit & Run.

  6. I dont have the words of some of the posters on here,RTC,CQN or Phil Mac but i would just like to say Paul.THANK YOU its only two words but its a start to expressing my gratitude so again Paul THANK YOU and keep it up.

  7. David

    Good stuff as usual Paul, and would be interested in your opinion in the attempt of the administrators in trying to push the Daniel Cousin registration through. That cannot, surely, be something that they should do under their remit? Also note that the administrators give different addresses for themselves, therefore, they are from different offices of Duff and Phelps. Going to do some digging there.

    Sorry about the “false alarm” this morning, thought I had something there, but there is definitely something just not right going on here.

  8. dellbell67

    As an avid reader and seldom replier good work Paul.

    Keep it up and please inform us ASAP off the legality of Duff & Duffer re Cousins

  9. Hi Paul

    Great update again, and to echo what most people have said – you really lay it out in such a way that makes it not only interesting but understandable. One of the big concerns I had on Tuesday when the administration announcement was made was that RFC may get an “easier” ride from Duff & Co, however thanks to your explanation and in fairness to the chap called Clark (I think) from Duff Co – when he introduced himself he made it clear that they could not hide anything, even the initial announcement that they could not “find” some of the monies was incredible. I also appreciate the update from MS Robison as I also emailed her and her boss about some of the statements that have been coming from Hollyrood….not the school I hasten to add. I indicated how UEFA look upon politicians getting involved, but as yet have no reply – so many thanks for getting me some peace of mind there. Many thanks again

    • Thanks Robert.
      Things are moving so fast it is hard to keep up.
      Andy Muirhead at Scotzine.com is excellent for the “breakinm news” stuff, and he got the reply from Ms Robison, so chapeau to him.
      Between Andy, Phil Mac G, RTC and with myself nit picking at the rear (unpleasant image that is) hopefully we can keep everyone enlightened!

  10. oisin71

    Excellent reading as always Paul.
    Its like the disection of a warm corpse. ;)

    • I always managed to avoid attending a post-mortem. I understand that pathologists have a very black sense of humour, a bit like Insolvency Practitioners I suppose.

      Although someone very unkindly said that to them Messrs Whitehouse and Clark, along with Mr Whyte, were a modern day “Three Stooges”.

  11. The intriguing thing here is the revelation that HMRC could have blocked the appointment of Duff and Phelps and imposed their own people just as they’ve done with Portsmouth. Presumably, D&P are well aware of this and they will realise that HMRC have formulated a Cunning Plan into which they have been inserted for strategic reasons. But can they figure out what it actually is? And are they comfortable with it?
    Was their amateurish performance at the Ibrox press conference a result of extreme nervousness?

    Or… were they deliberately making such a mess of it in the hope that they might be hooked out of the position in double jig time?
    Even I know that their primary responsibility is to the creditors and not to the club or its supporters. How on earth could qualified professionals repeatedly state the opposite? They seem to have seriously undermined their credibility already.

    It also strikes me as being a bit suspicious that they are confident that the club can trade its way out of administration and yet they admit that they have had no more than a brief preliminary look at the books. Surely that implausibly upbeat note wasn’t sounded purely to lure gullible supporters into Ibrox so that the hat can be passed round one last time?

    It’s all getting very exciting!

    • Henry,
      I cannot imagine responsible IP’s engineering for the court to fire them!
      I suspect the gung-ho attitude has been to avoid disprder today, and to get the match out of the way.
      If they think they have landed in a mess, they can ask to be excused, but that would be a very bad thing for them business wise. IP’s need to be able to handle the rough and the smooth.
      As you say, excitement is building about what on earth can happen next!

      • It still seems to me that their declaration of intent to work for the best interests of the club as their first priority is impossible for them to justify in terms of their professional obligations. That sounds to me like a GP stating that his first priority is not the needs of his patients but the profits of the pharmaceutical companies. Even though we can all suspect that it may be true in a number of cases, we don’t expect them to put confirmations on the record!
        If parties are so careless as to make public statements indicating that they are confused about their supposed priorities, I would expect the professional overseers to clarify the position. Otherwise the public can’t be assured of rigorous adherence to the principles and obligations which are presumed to apply.

  12. Carntyne

    RTC
    You say you’re not sure what is readable.
    I do.
    I have just read the Guardian article and it is not only readable, it is a journalistic triumph.
    Not something to be expected from the Scottish newspaper industry.
    Well done.

  13. brogan rogan trevino and hogan

    I am writing in these early hours of the morning because I struggle to find the time to make comment on this blog at other times– yet the comment is long—- long overdue.

    Lest there be any doubt, the consistent, detailed and indepth examination and information provided by Paul McConville on this blog is of a standard which could not normally be obtained in other circumstances without paying substantial and significant legal fees. Where the man finds the time and tenacity to maintain his output is a significant mystery and wonder.

    Now that is out of the road, let me just say that under normal circumstances, when a trustee in bankruptcy, a liquidator, a receiver, an administrator or any other type of insolvency practitioner is appointed, he or she will not normally be faced with a body of interested and informed bystanders who will scrutinise each and every move they make and opine pn whether they are doing the job properly and to an acceptable standard.

    Clearly, whatever assurances this lot made with regard to professionalism and veracity, was made before Duncan Menzies as he sat on the judicial bench. If Big Dunc has it brought to his attention that the Administrators are not doing the job properly, then he will take steps– male no mistake.

    • Thanks BRTH (beams modestly).
      I can exlusively reveal my secret – I just read the rules and write them down!

      D&P might have made a huge blunder in not realising how closely they would be watched. I wonder if they had a lot to do with Mr Whyte heading off –

      “Excuse me Craig, this is not your office any more and we would really really like it if you left…we will get security if you need help finding the door!”

    • BRTH – seconded. Splendid post.
      All the scrutiny in the world achieves very little unless there is some understanding of what is going on. We could monitor a foreign language talk radio station for years without having a clue about what its position is but Paul McConville is the equivalent of the interpreter who not only provides translated transcripts but he also summarises the content.
      This blog has become a vital part of the citizen investigation.

  14. Chris

    I also just want to add to the chorus of praise for this blog, the technical and insightful analysis that it provides, and above all, its impartiality. I was somewhat put off by RTC for this reason, and agree you have very much stepped up to the plate. The quality of mainstream journalism is lagging way behind and seemingly without any expert input.

    I was amazed, for example, by the coverage of McFall’s call for an FSA investigation. Does nobody realise that Rangers is not a financial services business, and therefore not within the FSA’s remit? Mr. Whyte, although I doubt that the FSA would accept him as an approved person, would not have been terribly amused I suspect, given the ruling by the FSA this week in relation to a stockbroking firm allegedly linked to him.

    The most surprising thing for me in the last few days (Mr. Salmond’s intervention aside) was the very confident assertion by the Administrators that Rangers would not go into liquidation, when they appeared (or deliberately gave the impression) to know little or nothing about the finances of the club, and where that option is to a large extent outside of their control. Of course, Duff & Phelps have been advising the club for six months, and would obviously have been very closely involved in the CVA proposal made by Rangers, and it would be surprising if they didn’t know a hell of a lot more than they let on.

    It would be nice to see some accounts of course (but from a personal point of view there’s no rush to get them done by 31st March).

  15. kotton

    well done paul excellent read as always its really like watching C4 BB all over again u have CW=clearly nasty nick lol keep up the great work i have learned more about the law reading you than i ever would of in my whole life

  16. Was talking to someone today. Decent guy with an avid interest in everything that you blog. I shall quote him directly,

    ” he ain’t a bad c**t, by the way”

    I have known this guy twenty years – this is the most praise that I have ever heard pass his lips.

    You must be doing something damned right.

    (Edited by PMcC as my family sometimes reads this – hope you don’t mind Garry)

    • Citizen journalism, from all the bloggers writing about this has left the MSM in the shade, as RTC wrote in the Guardian.

      Thanks to you for chipping in from your perspective. The more viewpoints the better.

      • Yeah sorry about the language there – wasn’t thinking, perhaps a direct quote would have been better glossed over with a more eloquent account.

        Just as a complete aside on the administrators of Rangers. Regarding recent revelations including both Strathclyde Police investigations – and a visit to the lawyers office that Craig Whyte used to hold funds for the Rangers takeover by City of London Police. I would say that it is possible that the current Administrators cannot publicly announce what they know regarding Ibrox funds for fear of it being prejudicial in future legal matters.

        I fear that some people are determined that Duff & Phelps are implicit in the Rangers mess, and a lack of instant transparency is evidence of such – when in reality, a mess that has taken many months (some may argue years) to create cannot be simply rectified in a matter of days, especially if there has been a deceitful web spun.

        What was promising to hear is that, at the end of all of this – a promise has been made to publish the full findings publicly.

        Patience in this matter, was be a virtue.

  17. Fisiani

    Can anyone inform Duncan Menzies that the RFC administrators have declared bthat they are working in the best interest of the club and not the creditors.? Does Dunc have to find this out in the MSM?
    What difference would it make?

  18. MDCCCLXXXVIII

    Paul another great read, with all the legalese put in to legible English.

    Salut.

  19. Good morning, Paul

    Good to see you getting the plaudits for your recent work. Richly deserved they are, too. Well done.
    As an aside, and purely by way of curiosity on my part, do you happen to know who was/were the proposed appointee(s) in the HMRC petition?

    Regards,
    Iain

    • Iain,

      I had a note of it somewhere, but it is swamped in the 23 tabs I have open on my desktop and a flurry of papers re all sorts of RFC related stuff.

      There is therefore every likelihood that I will post a shopping list to my blog by mistake later!

  20. ifa007

    I consider myself well versed in financial matters. I have just listened to Paul Clark (Duff & Phelps) discussing the possible appeal regarding signing D Cousin. According to BBC Scotland DC is prepared to accept £6500.00 pw!
    My understandung is administrators try to keep the Co trading whilst reducing assets.
    I don;t think I will be able to take another breath if that signing goes ahead and then see local employees who have worked there for years on the minimum wage made redundant.

  21. Stan Black

    Why are Rangers in administration. If as reported they have 24 million from advanced season ticket sales and they have held back on paying tax, surely they are solvent – Based on these figures, they have more cash than any other Scottish club.. Why did they go into administration before the tax case and can they be placed into administration again if they come out of it before the big tax case has been concluded.

    If Rangers get to right of all debt, including money owed to other Scottish clubs and the carry on as normal, why should any company ever pay tax ?

    Would it be legal to take over a company for 9 months and not bother paying tax with the intention of running up as much debt as possible until forced into administration.

    • gopaul

      But whyte (white knight indeed) – reported they running £10million loss per year – so you have to take £10mill of that….

      Also due £9 million to revenue..

      Million to hearts…..

      thats 20 million and that what we know……
      its all adding up and that 24 mill will run out pretty soon if there is any other undeclared bills……

      Insolvent means they cant pay all their bills.

  22. HmmDuff

    Hi – this is a great site! Not sure if you covered this already but I’ve looked at the Debt Assignation posted on the RTC site and I’d say there is an issue of whether the Floating Charge was effectively transferred. The document purports to assign the Security Documents but cl. 2.2.1 states that Company and Subsidiaries are “released and discharged from any obligations” to Lloyds / BoS with respect to the Assigned Documents, which includes the debt and the FCs. This is more like a novation under English law rather than an assignment which is what I would have expected was done here. Lloyds seems to still be the named lender on the Floating Charge (or it was when the tickets were released from the FC). Any thoughts?

  23. ifa007

    Money for nothing: Whyte used £24m Ticketus deal to pay off bank
    Last updated at 11:04 PM on 20th February 2012

    http://tinyurl.com/6luvb2n

    I fail to understand why (AML) Anti Money Laundering laws hadn’t been applied…..I have stated before even if a young person is buying a house and the deposit is coming from the Bank of Mum & Dad we have to provide an audit trail to verify this…to avoid any form of money laundering. I cannot understand why Lloyds and Murrays solicitors would not have complied with this. It is not enough to demonstrate a sum deposited in the account the day before…you must dee where that has come from….This must be a breach of regulations….and for this we should be given answers.

  24. HmmDuff

    I’ve been scratching my head about the claims RFC owes money to Ticketus. Although Ticketus seem to have “bought” the ticket allocation (the nature of what they’ve bought is yet to come clear), RFC are still selling the tickets through their normal channels. I’d guess there must be an agency type arrangement where RFC are selling the tickets as agents for Ticketus. Any money RFC collects would be due to be paid over to Ticketus and it seems they haven’t done this.

    Interestingly, since the agency arrangement is not disclosed to the purchasers of the tickets, they have a claim as an unsecured creditor against RFC (acting as undisclosed agent) if RFC does not honour the ticket.

  25. gopaul

    type

    rangers fc

    into google – you will be very suprised by the first item in google !!!!

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