This will be a briefish (yes, I know my reader finds that hard to believe) roundup of where things are as regards Messrs Duff & Phelps (D&P) and the administration of Rangers Football Club plc (hereafter referred to, for brevity, as “RFC”). The plan is to write at my usual length about as many of the legal aspects of this as I can, but no promises!
Rangers Football Club plc (In Administration – possibly)
This week it was disclosed that RFC had gone to the Court of Session to have an administration order granted. This was apparently because, when D&P were appointed by the company on 14th February there had not been any notification made to the Financial Services Authority. RFC had registered with the FSA as an Introducer on 26th February 2008 in connection with the trading name “Rangers Money”.
Failure by D&P to notify the FSA of their appointment meant that it could have been challenged. Therefore there will be a further hearing on Monday 19th March to decide if D&P should now be appointed by the court as administrators. The application is to backdate the appointment to 14th February, thus ensuring that the administrators’ actions so far will not be ineffective.
It is possible that another party, such as a creditor, could challenge the petition and oppose D&P being appointed, perhaps by lodging their own petition for an administrator. That is unlikely though.
All going to plan therefore, there will be a court order on Monday which will restore the status quo and avoid any complications, at least regarding the appointment.
In addition, the back-dating of the appointment ensures that the deadline of 10th April for D&P to make their proposals to creditors regarding how to achieve the objectives of administration will not be changed, unless of course D&P make a separate application to the court to move that back.
If Rangers are not in Administration, do they get the 10 point penalty back?
I have read some excited speculation (a) from Celtic fans thinking that the making of an administration order on Monday would be a second Insolvency Event, and thus a further 10 point penalty would be applied and (b) from Rangers fans arguing that as RFC was never in administration, they should get the 10 points back, at least temporarily, and be able to pursue a case against the SPL for penalising RFC incorrectly. Some even suggested the league season should be declared void, as the demoralising effects of the penalty have clearly affected the course of the season.
Neither group is correct, as far as I can tell.
If there is a further Insolvency Event in the same season, as part of the same insolvency process, there is no second 10 point penalty. If RFC remained in administration at the start of next season, then a further penalty would be applied then.
As regards getting the 10 points back, the court has not declared the original appointment invalid. That is why the Rangers.co.uk website still discloses that the “administrators” are running the club as agents for RFC. There has therefore been an insolvency event. The blame for the error seems to lie with D&P, rather than with the SPL. After all, the SPL, as did the court and Companies House, received an ex facie valid Notice of Appointment. The SPL cannot be faulted for relying on it.
As the blame rests therefore on D&P or its advisers, and D&P are of course agents for RFC, then any aggrieved person could seek to take it up with them. However, a shareholder would not have been prejudiced, as shares in RFC are valueless, and spectators would not be able to demonstrate any financial losses as a result of the error.
Could a player argue that the effect of the error and the penalty shook the team’s confidence so much that win bonuses were not achieved? It is technically possible, but I would imagine rather unlikely.
As for declaring the SPL void, as the error is legally one on the part of RFC (as carried out by its agents) this would lead to them benefiting from their own mistake. That will not be allowed.
Therefore, as regards the 10 point penalty, it truly is a case of “nothing to see here” – move along please”.
Rangers v Ticketus
RFC and Ticketus have been in court for the last two days, and are back again on Monday, arguing about whether or not D&P can get round the contract whereby Ticketus paid £24 million or thereby for the rights to roughly 25,000 RFC season tickets annually for a four year period. Ticketus views itself as owning the rights to those tickets, whilst D&P want to turn that into a debt, making Ticketus creditors, and this capable of being “dealt with” in a Company Voluntary Arrangement (CVA).
The argument publicised so far for RFC seems to be that ignoring what is admitted to be a valid contract will help the administration process. However, that seems to be ignoring the apparent admission that the contract is valid.
The legal issues about transfer of future rights are very complex and frankly if Lord Hodge has to determine that, there will be appeals ongoing for a long time to come.
In addition, if it is simply an application for “Directions” from the court then D&P would need to spell out exactly how the transfer to creditor status will help RFC, especially as Tuicketus form part of the “Blue Knights” consortium.
I hope that Lord Hodge produces a detailed judgment as the arguments being put before him by two of the most eminent Scottish QC’s, and his decision, deserve as wide an audience as possible.
Rangers v Collyer Bristow
A four day hearing has been set for 30th March in the Companies Court in London regarding the £3.6 million held in the Collyer Bristow client account. There are claimants to that money as follows: D&P for RFC; HMRC for unpaid tax; Merchant Turnaround (a company connected to Mr Whyte); Ticketus; and the Jerome Group Pension Fund.
I have a post half done re the interesting cast involved in this case.
One thing is certain – there will not be a quick resolution to his issue, and if D&P are budgeting on this sum to get then through the next few months, then they will be sorely disappointed.
Posted by Paul McConville