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 (6^th 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 6^th 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 14^th 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 14^th? 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