Rangers’ Administration – Day 4,738 – Round Up Part 1 – Court Actions

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

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21 Comments

Filed under Administration, Craig Whyte's Companies, Football, Rangers, Round-ups, SPL

21 responses to “Rangers’ Administration – Day 4,738 – Round Up Part 1 – Court Actions

  1. Bartin Main

    excellent round up as usual Paul.

  2. Joseph

    Can’t wait for the next installment!

  3. tenerifetim

    Excellent summary of this weeks events!
    Does Cousin have a claim against the Pantomime Horse that is D&D since if they were not technically in Administration ,RFC(NIA) could have completed his registration?

    • Thanks TT,

      The Insolvency Act protects the administrators from liability where there has been a defect in their appointment. Therefore Mr Cousin could not pursue D&P. The only exception would be if they knew they were invalidly appointed and in that knowledge decided to continue anyway. That is not the case here.

  4. ghorillaguy

    Excellent as always Paul!

    Just one point however. If a team goes into a second administration, having came out of the first insolvency intact (in the same season) a further penalty would apply.

    • Thanks TBK.

      Correct – a team can get more than one 10 point penalty in a season if there were two unrelated insolvency events in the same season. It would take some doing to manage that, I think!

      • John

        If they came out of administration and then went back into it before end of season then surely it would be a further 25 point penalty as has already happened to Dundee FC.

  5. The Battered Bunnet

    Thanks Paul. The detail of the arguments presented to Lord Hodge will fill in a number of gaps in our knowledge of the background to the takeover.

    I look forward to your reflections on that.

    TBB

    • Mr Bunnet,

      One good thing about a court is that spin doctors have no place in it – on the other hand they are full of lawyers! I think that Lord Hodge’s decision will be almost as interesting as the FTT decision (although considerably shorter!)

  6. Stephen

    Thanks, very informative.

    Quick question: Why is the Ticketus case being held in Scotland and the Collyer Bristow case in London?

    And where are future legal battles likely to take place?

    • Thank you Stephen,

      Ticketus case is in Edinburgh as it is part of the administration of a Scottish based company (Rangers Football Club plc).

      Collyer Bristow is in London as the funds were held by solicitors in England.

      Other cases can be in Edinburgh, London and presumably the courts of the British Virgin Islands!

  7. Charles Young

    Good summary for thickos like me to understand the issues.

    On the Rangers v Ticketus it must be the case that Lord Hodge would give detailed reasons in an Interlocutor. I would imagine that there would be tapes of the hearing and transcripts of the proceedings as well.

    On the face of it (to me at least) D & P have no legal case to put. They are simply saying it would be helpful if the Ticketus deal were treated as a debt.
    I would have thought that Ticketus have a futures contract and one would assume that knowing who they were dealing with (Craigy boy) and the likelihood of administration that it is legally sound.

    Whoever wins this must be a case for appeal and until it is resolved no one in their right minds would bid for the Rangers. IMHO of course.

    As for the High Court in London. Wake me up in a years time. This could go ,on and on and on..

    • Thanks Charles….(it couldn’t be that this is Chick is it) 😉

      I would expect a detailed judgement when his Lordship is done. That would do two things, one hopes. Firstly explain the nature of the Ticketus contract, and secondly confirm which of the myriad Ticketus companies is actually in this deal!

      I agree that RFC can’t be sold till the various cases are sorted, and the assets can’t be sold either till the validity of the Floating Charge is determined. (On reflection, the assets could be sold, but D&P can’t distribute the funds to creditors till the FC is clarified.)

      This will be in court for a long long time!

      • jim62

        Tapes or transcripts of court hearings in Scotland???…chance would be a fine thing

        Only done at proofs or jury trials to my knowledge

        The admin process of Rangers might single handedly save parts of the Scottish legal profession from the recession…I’m just jealous 🙂

  8. ramsay smith

    If Ticketus lose will they have a valid claim against the solicitors who acted for them in the ticket deal?

  9. Cheers Paul, love these summary pieces.

    Still a bit of confusion around ticketus and their deal. Hear 100,000 season tickets over three years, then yourself say 25,000 over 4.

    Do you mean 25,000 tickets belong to ticketus every year for next 4 years? I also understand that ticketus are entitled to first 60% of all tickets sold.

    If RFC do continue to trade but over three or four seasons this 60% of tickets doesn’t hit the 100,000 agreement….would that roll on until the 100,000 is met?

    • Thanks!

      I meant roughly 25k tickets each and every year for four years – the present season + the three to come.

      The exact figures are in the famous MG05 form which was lodged aqnd then withdrawn last summer.

  10. Pingback: Rangers FC Thread - Page 125

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