Why Did Rangers’ Administrator Say that a “Newco with CVA Side Route” Could be done by 11th May?

I blogged yesterday on what I thought, to be frank, was a fanciful though theoretically possible, scheme. Bill Miller, the US trucking magnate, would buy the assets of Rangers, pit them into his “incubator company”, and have “Rangers” turn out at Perth for the last game of the season on 13th May. This would challenge the SPL to cancel the game. If they did not, then he might have a shot at arguing that newco had already been admitted to the SPL, and thus could start next season free from administration and additional points penalties.

It would be a huge gamble to do so on a wing and a prayer, and I wondered, idly, if perhaps some version of this scenario had been engaging Mr Miller and the SPL in discussions over the last week.

Last night Mr Doncaster, Chief Executive of the SPL, appeared on Sportsound. On each hearing I gain the impression that some more straightforward version of my “Switcheroo” plan might have been canvassed with him, and not fully ruled out.

To be fair to him, I am transcribing his broadcast so as to ensure that the full terms of what he said are recorded, and I do not want to comment unfairly upon him due to a misheard word on my part. I will therefore leave detailed analysis of what he said until, probably, tonight.

Many sensible people commented on my post yesterday as to why the “Switcheroo” plan would be a non-starter. This was for various different reasons such as UEFA sanctions, Registration requirements, SPL licences, insurance for players, TUPE regulations, HMRC pursuit etc etc.

I think that all of the criticisms of the plan have validity.

That therefore brings me back to the comment by Mr Whitehouse which headed up my post yesterday. Why did he say that the “side route” plan could allow the new owner to take control by 11th May?

Presumably Mr Miller’s plan, which he was good enough to outline previously, remains to transfer all of the assets of Rangers Football Club PLC to his newco. If he only moved the fixed assets, Ibrox and Murray Park, then one wonders what the point of the exercise is.

To have “Rangers” out of administration requires (a) a successful CVA to be agreed before next season starts, which I think is impossible (Niall, I will come back in detail to your through analysis of why it will happen) or (b) an entity to be playing as “Rangers” which is not in administration.

Mr Miller’s plan is clearly consistent with (b).

Therefore, he must envisage purchase of all assets, including players’ registrations, and transfer of all of these to newco, prior to the end of the season.

In that case, how does he get round the Grand National size and number of hurdles as described by commenters yesterday?

Mr Doncaster’s comments last night seemed to be suggesting that there was only a very “fine difference” between a newco and a company exiting administration via a CVA.

As I said, I don’t want to criticise him unfairly without having all of his comments together for analysis, but, frankly, that comment, which he did repeat, is, to quote many leading theologians, “a load of fetid dingo’s kidneys”!

All of which leads me to add 2 + 2 and end up with 7.

But, and I leave these questions for people to ponder today:-

1                     Why did Mr Whitehouse mention having the deal done by 11th May, prior to the end of the season?

2                     How do he and Mr Miller envisage transferring all the assets, including players etc to a newco mid-season?

3                     Has this been discussed between Duff & Phelps, Mr Miller and the SPL?

4                     If so, has it been ruled out, accepted, or given a “nod and a wink”?

5                     What will the SPL do if Mr Miller completes his purchase on 11th May – will it rubber stamp the game on the 13th, or cancel it as newco Rangers, legally, have as little right to play the game against St Johnstone as the Dukla Pumpherston Sawmill & Tannery Charity XI?

6                     Have there been any discussions with Hibs or Dunfermline about the status of a relegated club, if Rangers, as presently constituted, fail to make it to the end of the season?

The SPL could deal with my arrant nonsense very simply, by spelling out how a team could change hands to a newco mid-season, and how this would be approved or rejected.

Will Mr Doncaster do so, or has his media blitz ceased for now, at least until next Monday?

What discussions have there been amongst the SPL clubs about such a scenario?

As has been the case almost every day since Mr Whyte first was driven up Edmiston Drive, we will end the day with even more questions that we started it!

Advertisements

18 Comments

Filed under Administration, Football Governance, Insolvency Act 1986, Rangers, SPL

18 responses to “Why Did Rangers’ Administrator Say that a “Newco with CVA Side Route” Could be done by 11th May?

  1. Jackie

    Although I’d prefer to see Dunfermline relegated, I think Rod Petrie would present a different proposition to the SPL Board if they try to throw Hibs out in preference to a brand new Football Club.

  2. Tyke Bhoy

    Has Mr Doncaster realised yet that Monday 7th May is a Bank Holiday?

  3. If Rangers newco walk back into the SPL,debt free,then turn out the lights and lock the door because Scottish football will be a laughing stock.
    Every single business who runs up debt will be waving and cheering saying ‘No more worries because if Rangers can do fiddling the cash so can we.’

  4. TonyD

    Paul,
    It was always the intention of CW to release the floating charge from Lloyds Group and take security himself over the assets. Once done, it was easy to force rfc into liquidation due to the non-payment to HMRC of PAYE/VAT etc during the 9 months of his tenure.

    All creditors, HMRC et al, are entitled ”to look beyond or pierce the corporate veil ” to show his actions were at best a sham and at worse, fraudulent. This will ensure his floating charge will not stand.

    If we look at D & P accounts (included in statement to creditors) we see that the book value of assets (Ibrox, Murray Park, Car park, sundry investments) are reported at c £113 Million. So my question is, why are D & P entertaining offers of £11.2 Million to buy the club and simply transfer assets to a newco? This is wholly illegal and not in the interests of the creditors which is what D & P are charged by the courts to do!

    (That is before looking at selling the playing staff. It is reasonable that some big names can be sold off in the interests of creditors while still retaining a team capable of taking the field….surely that is what D & P should be looking at….not acting as a wet nurse to this company)

    Confused.
    Edinburgh

    • Bhoywonder

      Excellent summary Tony and the main point of this sorry mess raised. D&P have had the interests of RFC (IA) in mind as a “going concern” far and above any creditor since the 14th February, That’s 11 weeks they’ve had to find a buyer, reduce outgoings and balance the accounts. They’ve done none of these things. Surely now the CoS must, in the interests of the creditors, bring their tactics into question?

  5. Bhoywonder

    I think your scenario deserves a longer look Paul. It is very odd that the acquisition date of 11th May was mentioned (2 days before the last game of the season!) It would appear that there is something afoot, but quite what it is I don’t know. I believe you are close to the answer, but maybe missing something.

  6. drew

    Bhoywonder, what he may be missing is that, this is simply a distraction to the sale of Rangers already done. Perhaps Rangers are now playing in the SPL as a newco without our knowledge?? It wouldn’t be the first time Rangers have hoodwinked everyone …

    • Bhoywonder

      Not a chance. Celtic just played RFC (ia) and no one else. A newco needs a different name. I don’t recall anyone state after the game on Sunday that Celtic played Rangers Thistle FC or something. So that’s that out the proverbial windae.

      The deed has yet to be attempted, whatever little scheme Doncaster, Miller and the aptly named Duff and Phelps (or is that duffsohelpus!!) are trying to dream up. If RFC (ia) are to be parachuted into the SPL as a newco….then the switcheroo would need to be another SPL team. As far as I can see, that’s the only way they can get away with it. Otherwise it’s Div 3.

  7. deekbhoy

    a very “fine difference” between a newco and a company exiting administration via a CVA.

    It was obvious from the comment last night such as the one above from Mr Doncaster that he is well out of his depth on this. This comment obviously nonsense and the sooner you have a fuller analysis of why this is the better I say.

    My initial reaction is the realisation is that the people who run the SPL have little or no idea of what is going on and are therefore open to be easily persuaded by any slick talking bidder.

    Secondly the comments of the Kilmarnock Chairman about having to compromise on sporting integrity shows that they have no real interest in the game apart from making money from it. Morals or fans do not really matter to them only their ticket money.

  8. Timmy

    Nice blog paul

    Just want too ask does craig whyte have the power to apply for a winding up order, if he doesn’t like the bids?

  9. Sarah Leyden

    Paul – If your scenario proves to be true then it directly involves UEFA and not the quislings of the SPL. Winning or losing points in that game has the liklihood of confirming or compromising St Johnstone’s EUROPA Cup place, a UEFA administered tournament. If your scenario were to unfold and St Johsntone’s place in Europe was compromised then I would fight that decision until every last court of appeal and arbitartion was exhausted. SJFC have never qualified for the EUROPA CUP in in its current form. In fact,we have only qualified for European competition twice in our proud and very decent history. To have that opportunity taken from us by a patent fraud would be the very last straw for myself, my family and many of my friends, We may have a very small fan base but I can assure you we know what dedication is really about – and we don’t do walking away.

    • John McFarlane

      Well said Sarah, if Rangers try this tactic then the SPL must abandon game and award a 3-0 win to St Johnstone. If that scenario would put St Johnstone into the Europa cup the they must fight this through all of UEFA courts just like Sion F.C. did last year over player registration

    • Bhoywonder

      Truly no one more deserving than SJ of a place in Europe this year following some sterling results (Motherwell recently excluded) Whether SJ can sustain their place until then remains to be seen, given they still have to play Celtic and Hearts (a) and Rangers (ia) (h) But again this is a good example of how diverse and widespread these decisions can be. So, well said (I always enjoy going to Perth; one of my fav places in Scotland)

  10. KG

    Why would the creditors agree to a CVA where the assets have been shifted into a new company. If the CVA were to fail then the creditors could not fall back on the assets.

  11. martin m

    paul, can you advise if bill miller requires shooter whytes shares or his floating charge for all this to succeed ? what part to play does the bold shooter have in all this ? we all know blue knights need his shares for a cva but what about the miller plan ? would it be open to various legal challenges and also would players be free to walk from rfc

  12. Den

    When SDM put Rangers up for sale no mainstream businessman would touch it.

    One thing Whyte would not do is put his own money at risk and he has structured the takeover to ensure that he has security over the assets so he will recover all the money he has put in. Looking at the size of the offers there will be nothing for the unsecured Creditors.

    I can’t understand why no one has challenged D&P as Administrators. They have not cut wage cuts except for a short window, they have let deadlines slip and have done nothing to show that there is a business model that would be feasible post administration. The fact that they countenance a bid that hives off the assets from the liabilities is unbelievable. It is asset stripping.

    Even with a CVA being agreed neither bid will leave money for re-building, the top players will be gone for rock bottom prices and no European income for at least 3 years. Not a great financial prospect.

    The only way they can survive is to cut their costs, accept that they will not be at the top for a while and re-build organically. The problem with this is that their fans like to be associated with success and have not shown great loyalty or generosity in the lean times.

    Rangers need a Fergus McCann. A real businessman with the best interests of the club at heart and the will to set the foundations on which success can be built. There are not many like that and it is probably too late in any case.

  13. Pingback: Neil Doncaster of the SPL on BBC Radio Scotland – Transcript 30 April | Random Thoughts Re Scots Law by Paul McConville

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s