Charles Green will be Appointed Today to Assist Running Rangers. Or Maybe He Won’t…

 

In which I suggest, I am sure wrongly, that Duff & Phelps cannot proofread and that the CVA Proposal might not therefore be entirely accurate.

 

According to the Rangers CVA Proposal produced by Duff & Phelps today is an important day in the process of saving this fine Scottish institution. In all that Duff & Phelps have produced so far, the CVA Proposal is perhaps the most important. This document needs to persuade the creditors of Rangers Football Club PLC, and especially Ticketus and HMRC, that the deal being offered by Mr Green whereby he lends Rangers just over £8 million to fund a CVA is the best deal for the creditors. I will number crunch in a later post, but it is clear that the paperwork produced in the CVA has to do the best job possible to persuade the creditors, and therefore will have been finely honed, edited, reviewed and polished, won’t it?

According to the CVA Proposal today (6th June) is an important day. It is mentioned four times in the CVA Proposal, as follows.

In the definitions section:-

“CVA Trading Costs” means the costs, expenses and fees payable as an expense of the Administration (but shall not include the Joint Administrators remuneration or the Supervisors‘ Remuneration) in the period from 6 June 2012 to the earlier of: (1) the draw down of the Sevco Loan; or (2) the completion of the purchase of the business and assets of the Company by Sevco.

At paragraph 4.21:-

From 6 June 2012, Charles Green will be appointed to assist in the day-to-day management of the business of the Company (at no cost to the Company or the Joint Administrators), in order to manage the ongoing trading costs of the Company and allow for a smooth transition in ownership.

In paragraph 5.14:-

During this period from 6 June 2012, a number of receipts may be received by the Company, in respect of:

5.14.1 Outstanding Player Transfer Fees;

5.14.2 The sales of season tickets for Ibrox Stadium, in respect of the 2012/13 season;

5.14.3 player transfer fees with respect to players sold after 12 May 2012; and

5.14.4 the proceeds of sums due from the SPL together with any broadcasting monies payable to the Company.

In the Notes on Page 38:-

9. Anticipated Administration trading shortfall as at 6 June 2012. In a Liquidation scenario it is likely that the the cessation of trade date would be after 6 June 2012 but for comparison purposes it has been assumed as this date.

Therefore, according to the CVA Proposal, today is very important. First of all, today is the day from which D&P start to treat the process differently. No longer, on the face of it, are they running Rangers in administration, but instead they are treating this as the CVA Trading period, during which money in will be treated differently than up till now.

Today also Mr Green is to be appointed formally to assist, for no fee and at no cost to D&P or Rangers, with the day-to-day management of the company. This is to manage the ongoing trading costs of the Company and allow for a smooth transition in ownership.

This is a very commendable idea. After all continuity is important and if a man is willing to lend someone over £8 million, he wants to make sure it is spent properly. It does raise the question as to what official role Mr Green has held with Rangers up to now (answer = none) as he appears to have become as voluble a spokesman for them as Messrs Clark and Whitehouse of D&P.

From today D&P will treat trading receipts differently.

None of the following, from today according to the CVA Proposal, will be assets for the purposes of the creditors.

5.14.2 The sales of season tickets for Ibrox Stadium, in respect of the 2012/13 season;

5.14.3 player transfer fees with respect to players sold after 12 May 2012; and

5.14.4 the proceeds of sums due from the SPL together with any broadcasting monies payable to the Company.

Instead these will be used to fund the ongoing running costs of the company as it seeks to exit administration. A creditor might wonder why, if for example, Messrs Davis and McGregor had been sold yesterday these funds would have been for the benefit of creditors, but from today they will not. It almost looks as if the creditors are being deprived of assets which otherwise would give them a better result than Mr Green’s CVA.

D&P have also prepared their calculations effective as at today’s date regarding the comparative advantages of a CVA over a newco asset sale and liquidation.

What is so important about today? Where in the Insolvency Rules is the date 8 days before the creditors’ meeting to vote on the CVA specified as having a status whereby the administrators can move the goalposts like this? Is it appropriate that Mr Green, for a week prior to the creditors’ vote will have a role in managing the company which could, in theory, include him making decisions prejudicial to the body of creditors? After all, he, as opposed to Messrs D&P owes no duty to creditors. (For the avoidance of doubt there is no suggestion that Mr Green will so act.)

Or is it something far simpler?

D&P have been dealing with huge criticism and bafflement about its handling of this administration process. I have spoken to no one who thinks it fits how these things are dealt with. That is not to say necessarily that it is wrong; it is certainly unconventional.

The firm is running up huge costs, now in excess of £3.3 million. One would hope that, included in their costs, there is a charge for a proofreader.

I suspect that the 6th June date is a mistake. After all, it seems that it was originally intended that the creditors’ vote would take place today, but delays in finalising proposals meant that it was put back to the 14th June.

Is it simply the case that D&P failed to have someone go through the CVA Proposal document and review it, correcting the dates to the 14th? After all, it makes far more sense for the CVA Trading period to start on the day they hope the CVA is approved, rather than 8 days before.

If it is a mistake, then how reliable, the creditors might ask, is the rest of the document. After the original D&P statement of affairs contained an arithmetical error of over £3 million, one would not be surprised of the creditors took the whole document with a large sack of salt. After all, they might say, if D&P cannot even get the dates right in their own pitch to the creditors, can they be trusted to have got the sums right either?

 

It is entirely possible that the piece above contains spelling errors or typographical errors. However, I am not charging someone £200,000 per week for my services.

Posted by Paul McConville

 

 

 

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21 Comments

Filed under Administration, Charles Green, Football, Rangers

21 responses to “Charles Green will be Appointed Today to Assist Running Rangers. Or Maybe He Won’t…

  1. It is quite breathtaking to see these charlatans at work. Every public pronouncement they make seems to be primarily designed as an insult to the very concept of decency.

  2. Michael

    Paul, are you sure?
    Wouldn’t this window of time provide an opportunity (through future season ticket sales and player sales) for the would-be buyer to raise the security needed to provide the loan that buys the club in the first place?
    ie the which comes first chicken or egg – as the money switch that set up the Whyte Ticketus deal in the first place.
    ie not only are the club being given a loan only, but they are the ones providing the security for the loan to the lender of the money for the loan.

  3. Den

    Great blog and as always a fantastic and unbiased analysis. All honest bloggers welcome comments whether they are critical or favourable. Keep up the sterling work.

  4. Geddy Lee

    This seems like a very poor deal on the table for creditors, especially if Rangers are going to try and ring -fence any money raised from a fire sale of their players.

    • Matt

      What really galls me is that Rangers are the only club that can go into administration and not start making players redundant left and right. We were told that the reason for this was that these players could be sold for a transfer fee. If the creditors are not going to see any of that transfer money, then why was their money being used to pay those wages for the last four months?

  5. Den

    Please delete the above post by me. It was inadvertently posted whilst editing it.

    It puzzles me …

    Rangers fans were warned by the others that this financial mess was coming … (but they ignored the ‘fibs’ coming out)
    I am sure that 50,000 loyal Rangers fans could easily have matched Green’s pathetic bid as it would have only cost £200 on average per person to have raised 10 million.

    They could have then voted in their own board and run the club themselves .. there would be no need for Rangers to pay back the £10 million loan (unless they were rolling in it) and all profits could have been ploughed directly back into the club,

    Funny how not one of them realised this sooner and put it all together.

    I could have mentioned this months back .. but I prefer to watch the ‘currant’ sideshow.

  6. davythelotion

    Perhaps the 6 june switcheroo is a way of getting round the clause in the ‘redundancy-lite contract adjustment that allowed players to leave for free if CW was still the owner of RFC(ia) on 1 June 2012?

  7. Bawsman

    “5.14.4 the proceeds of sums due from the SPL together with any broadcasting monies payable to the Company.”

    Surely they cannot be due a cheque for being runners up when they used players they have no means (nor apparent intention) of paying their previous clubs for?

  8. Bawsman

    Oh, one other thing Paul, where does any season book money go to? Ticketus? the club? The majority share-holder/owner? Mr. Green?
    Why should it not go to the creditors pot?

    • Values & Standards

      Creditors are people owed money for past transactions. ST money is pre-payment for future transactions. Under no circumstances should next season’s ST money be put in the creditors pot. That’s not to say some of it shouldn’t be claimed by Ticketus…

  9. Nobody Knows

    Paul, 5.14.3 player transfer fees with respect to players sold after 12 May 2012 – This is the date when Charles Green became involved? Could it be possible that deals have already been made that certain players have already been sold and details not released due to PR exercise for affect on pre-season ticket sales? Creditors would ask about this?

  10. cmh64

    Surely I can’t have been the only one who laughed at the ‘sale of season tickets for 2012 – 2013’ part? You’d have to be mad to buy one before all the issues are resolved.

  11. HighFibre

    Here’s a conundrum…
    Since so many of the amounts owed to creditors are TBC, how will it be possible to determine whether 75% of the creditors by value have accepted the CVA in the vote on the 14th?

  12. p groom

    d and p and green could not give a monkeys for all these questions and conundrums. they are already in post failed-cva mode and racing to get the newco coach and horses through all obstacles in its path as certain high-ups have probably requested/instructed/demanded and finally ordered.

  13. John Burns

    Another forensic examination as usual, Paul. I wonder if it has been a case of accidentally, on purpose.

    I know that you are busy, and that I may have missed your views on this matter previously, apologies if that is the case…however, can you shed any more light on the current ramifications of the floating charge inherited by Craig Whyte, when he paid off Lloyds?

    a) Does he in effect own Ibrox, its surrounds and, the training complex?

    b) Is this the reason that he appears to be so relaxed at the prospect of being sued by Ticketus for £27 million, and, as far as I am aware, has not addressed same in any utterances to the media; although he did tell the SFA that as far as their fine was concerned, they would get sfa?

    c) Could Green and his cohorts actually own the Rangers name and their footballing affiliations and ultimately have no where to play?

    d) Could Whyte transfer his ‘ownership’ of the assets to Ticketus in exchange for them dropping the action against him?

    e) Does Charles Green actually have ownership of Whyte’s 86% of the shares yet? I assume that there would be a document lodged at Companied House if there has been a formal change in status.

    f) What, if anything, will Whyte get out of his whole ownership tenure?

    g) Is Whyte ‘in it’, buried deep in the background, with Green?

  14. ian lewis

    Of course season ticket money could be used to pay creditors.The season ticket allows the purchaser to attend matches-the cost is paid to the club-the club can use the cash for whatever it wants.In a normal business creditors are nearly always paid as a result of “future transactions.It’s all academic as there is unlikely to be any season ticket money or Rangers in the SPL.

  15. Pingback: The Latest from Charles Green! Buy a Season Ticket and Get to Vote for the New Name for Murray Park! | Random Thoughts Re Scots Law by Paul McConville

  16. BigGav

    I too had wondered about the references to 6th June and came to the same conclusions as you, Paul.

    There are also some obvious errors in the document which make the whole thing rather sloppy.

    “5.32 The Joint Administrators believe that there are any [sic] circumstances …”

    “5.33 The circumstances referred to in paragraph 5.33 [sic] are as follows …”

  17. Gerry

    Fantastic blog and analysis Paul,
    Hope i’m not covering something covered on other posts, but It occurs to me that the CVA is written such that HMRC cannot agree – Surely !. (i’m no legal person so reading the CVA on face value)
    Since the EBT case in written into the CVA (section 6.2) then the following would therefore diminish HMRC’s share of the pot, ( not sure how they figure out voting rights ?)

    8.2 ‘As soon as practicable following the CVA Date all CVA Creditors who are currently party to legal proceedings against the Company shall at their own expense take all reasonable steps to procure the withdrawal, discontinuance or dismissal of those proceedings’

    “CVA Date” means the date of approval of the Proposal at the Statutory Meetings.

    Of coarse if the EBT decision occcurs before the CVA Date then this situation cannot occur, but i suspect it will take some time yet.

    Others creditors on the other hand would grab this since their share of the pot would be much greater ! – is it a case of divide and conquer !

  18. Pingback: When Did Rangers Get a New CEO, and Can He Make Signings Whilst in Administration? | Random Thoughts Re Scots Law by Paul McConville

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