In which I consider if Rangers, as suggested by Mr Green, can buy players whilst in administration, and also when Mr Green became CEO of Rangers.
One of my readers, David MacKenzie, posed the following question as a comment earlier.
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Can this be right?
“According to Alasdair Lamont of the BBC, Rangers could attempt to sign new players before the club is officially out of administration. Charles Green is aiming to have a Company Voluntary Arrangement approved on Thursday, after which there is a 28-day cooling-off period. In the meantime, Green has confirmed he had told a supporters’ meeting on Wednesday that he has a list of 19 target players drawn up, five of whom are involved at Euro 2012.”
Oh, Mr Green. And how do you think this will look with creditors? A tiny pot for creditors while you eye up no less than 19 players (including five internationals at the European Championships) to bring in at least some of them. I know what I would say, and it is not very polite.
If it is within the rules, even technically, I find it absolutely astonishing. And if he gets away with it, it will truly bring shame on the game in Scotland. He has spoken to the fans, to get them on his side, he has spoken to the SFA, in an attempt to get them on his side; but, has he spoken to the creditors, properly, to explain why he has so much money at his disposal for the club, but a pittance for them, or does he really think that the CVA document is enough? As with the rest involved in this, they are the last thing on his mind. And that’s the point. It seems like they are not being treated as people, they are being treated as numbers to be weighed against other numbers to get things right in a game.
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Thank you David. Now to see if we can answer the question.
Can a Club in Administration Register New Players?
As we see from Rule A6.20 below, a Club in administration (being an Insolvency Event as per the Rules) cannot register new players unless with the consent of the SPL Board. There are two cases where the Board can consider such an application by a Club where there has been an Insolvency Event: (a) where the new player is to replace a player whose contract has been terminated by mutual consent, or which has come to its end and (b) where a temporary replacement for an injured goalkeeper is needed.
The former covers the situation where contracts have expired, or players are released by agreement. Other than those two situations, a club in administration cannot register new players. The SPL Board authority to permit such registrations only extends to those two cases.
Does the sale of a player entitle a club under these restrictions to register new players as replacements? As with many things in the SPL and SFA Rules, it is not crystal clear. However, the sale, as opposed to the release of a player, seems to go against the wording of the Rule, as shown below. I previously felt that it could permit replacement of a player who had been sold, but on further analysis I have come to the opposite conclusion. A transfer, whilst having the same effect as a mutually agreed termination of contract is, on a strict definition, different.
According to Rangers website, they have 27 first team squad members and 32 reserve and Under 19 players. On the basis that the administrators, unlike other administrations in Scottish football, have not made large numbers of players redundant, it would seem unusual, without a mass exodus of released first team players, for them to be permitted to be excused the registration ban.
Rangers’ administrators of course attempted to sign Daniel Cousin as one of their first acts upon taking charge at Ibrox in February. This was refused by the SPL Board.
The relevant rule is A6.20 of the SPL Rules.
“Except with the consent of the Board and that only where (i) the term of a Player’s contract of service with his Club has expired and such contract has not been renewed or extended or such a contract has terminated with the mutual consent in writing of the Club and the Player concerned and, in either case, the registration of such Player with the League in terms of Section D of the Rules has been cancelled and a replacement Player is sought to be registered to replace the Player whose contract has so expired or been terminated; or, (ii) where the Player sought to be registered is a temporary replacement for a goalkeeper who is unable by reason of injury or illness to play and that only where written confirmation of such inability shall have been obtained by the Club from a qualified medical practitioner and submitted to the Board and the Board is satisfied that the Club concerned has no other goalkeeper who is registered and able to play, a Club that has taken, suffered or has been subject to an Insolvency Event or Events shall not be entitled or permitted to register any Player with the League and the League shall not register such a Player in terms of Section D of the Rules until such Insolvency Event or events shall no longer continue or subsist.”
When Did Mr Green Become CEO of Rangers?
Also from the BBC website, and repeated elsewhere, I noticed the following comment.
“From my point of view as CEO, we’ve sat with Ally and arranged a budget with him and should we be allowed to sign players, he will be able to do so.”
Now the CVA document, as I commented on before, indicated that Mr Green would be taking a role in the day-to-day management of Rangers from 6th June, even though the CVA vote is not until 14th June.
The Rangers website does not list Mr Green as CEO. In fact, it shows the two Board members as Mr Whyte and Mr King.
It is only for a few days, but if Mr Green had formally been appointed, then one thinks that Duff & Phelps would have mentioned it!
Random Thoughts Re Scots Law by Paul McConville 
Isn’t what he’s suggesting that if the CVA is accepted then, in their eyes, they are technically out of administration and can attempt to sign players without SPL approval and before 21 day cooling off period is over?
You really couldnt make it up……
It would appear that D&P, Mr Green, rangers, Mr Whyte, SFA, SPL & the Scottish MSM must think that most followers of football in Scotland are total eejits!!!
This charade of an administration becomes more laughable by the day & I can only HOPE that by this Thursday, we have an end game & can move on from this fiasco.
It beggars belief the nonsense we’ve been fed since February & at times (not very often though!!!) I’ve become quite sorry for the people involved in this mess as they stumble from one “foot in the mouth moment” to the next!!
On a more serious note, if I were a creditor of rangers, I would becoming more & more angry by the day at the way I was being treated. STILL in administration & talking about BUYING new players…..with money that’s still due to me. Comments like this must surely make the CVA a non starter. Talk about arrogance. Gallusness beyond belief.
By the way, I’ve just been elected as the new CEO for ‘Google’…..how do you know this, well…I’ve just told you, so it must be true!!!
Paul, thank you for a response that exceeded my expectations. Related to this though, what would FIFA and UEFA have to say if he were allowed, especially given that there is outstanding debt in relation to the transfer of players, including Lee Wallace and the transferred on Nikica Jelavic? It would not be allowed under new fair play rules, but would they escape those too?
Each person or group who has made a bid for the club sounds remarkably like the one before.
They have all made their bids conditional in spite of the fact that Duff and Phelps have said only unconditional bids would be acceptable.
The conditions attached to every bid have been so unrealistic that it would be impossible to achieve a successful CVA.
Which leaves me to believe that most bidders if not all are in some way connected, with each playing a part.
Strange as that theory might seem, it is no stranger than the events we have witnessed since administration on July 14th.
Liquidation the goal, and a nice few quid for Craig and his crew of scammers.
Carntyne you have hit a thought that has increasingly grown in my mind in the last few weeks. Its like a dance everyone moving slowly into position and will we actually see who the dancers ( that could have read chancers) actually are ? I don’t think so.
good story paul agian m8 .the cva wont go throw they wont be signing any1 and charlie green is tripping out his tree his comments are a pipe dream hes to lippy its just a matter of time before the rangers fans get wide to him and chew his leg of you all know what happens when the grumpy bear gets woke up lol green is well playing with fire .hes a front for ah we will tell you after the cva wit a responce to a question of importance
rangers fans never get wise to the truth until its too late, if they hear what they want then everything else factual is just “timmy lies”
the reporter said to green were you get the money he said a will tell you after the cva goes throw wit a responce is it criags whites wife paul murrys brother why the secrecy its all to hush hush for me .my advice to any1 wanting justice is keep emailing uefa and fifa till they respond .a think the scam is liquidation and wee whytey and d&p s get the 5.5million green has and some1 walks with 80 mil of assets for 5.5 its sad but true the creditors are being conned
The man is Summer Santa, delivering gifts to the Rangers masses. £30m here, money for players, best deal for creditors, new players, no sale of assets, rename murray park, rename ibrox, sack me if you dont like me, share options, trust in me, lots more investors coming…. Just buy a season ticket..! Why would the Rangers fans find anything to worry about…. It’s all p!sh anyways SFA will follow suit and it will be 12 in a row at least for the Bhoys… I have followed this intently inc some legal, fiscal and accountancy sites and there is no hope in what i hear and read..
Week after next we will all see the true story of the Rangers corruption and how they have cheated, discriminated, flagrantly gesticulated and shamefully disgraced this country and football in general.. Wee bit sad for the Gers footballing fan but i read and hear nothing from the general fan populus that says sorry, shows remorse or humility, that’s the saddest thing for me, from a mixed OF family. My club did that i would NEVER go back to that.. I coach boys football and would never have any of my boys disrespect a player, coach ref or parent…It’s part of growing up and being a good society member, the more we have the better society will find itself in..
your right jim scotland is lacking integrity across the board and needs to change
Thanks Mick…… I love fitba, watched the Irish tonight, bad keeping, defending and unlucky in a few situations, that’s how variable the game is and why we all love and debate it inc newspapers…. But in the situation where there is great evidence of breaking rules of competition closely confrimed by two of Britain’s biggest institutions and there is new guy who doesn’t pay tax, another new guy who is talking about buying players, renaming stadiums.. Paul put out an awesome discussion point a few days ago, the creditor’s agreement, Read that there is very little ambiguity where HMRC are going. PMG amd Paul says Green is not owner or CEO of Rangers… How he has so much say is beyond me.. D&P just want payed and not to be creditor, If ever a firm bit of more than they could chew it was these guys.. 2 weeks we will know the facts..!
You’re right, Mick. But when the one finger points forward four point backward ie ‘how honest am I in everything I do in my life?” Ponder.
You wouldn’t go back if it was your club? Yet you presumably still go to Sellick park despite the shamefull and sordid acts that were covered up there?
Lovely.
Which ‘shamefull (sic) and sordid acts’ precisely? If you’re referring to what happened at CBC, that was an act by one individual (subsequently jailed) on three players and happened 40 years ago; CBC were not part of Celtic FC. And what does it have to do with anything current anyway? I hope the only thing in common is that some of the tax dodgers at RFC* join the criminal at CBC in getting a jail sentence.
am hopeing its tesco who buy it and do a shop with it .a will try my hardest to get on the rip out of the stadium a would skip it in a day the gates a would scrap thou me and ma m8s would flatten it in a day and scrap the gates and metal skip the rest
Green said that he had ”big hands with which to hold lots of money with”.
I’m sure the creditors will be smiling at that one. He knows that a CVA is doomed. He is banking on a Newco getting right back in to the SPL and that’s when all the schemers will emerge from the woodwork.
Tactically it seems wrong for Green to talk of 19 players under consideration including 5 Internationals at the European Championships.
The existing playing staff will be feeling very uneasy under the circumstances and take whatever opportunity they can to get other employment.
More crucially the Creditors have a derisory CVA proposal in front of them. They know that International level players will cost a lot more than the $8.5m that is on offer (less expenses). If all that money is in play they will maybe want to hang on and see if they get a better offer. Wrong time to talk big I think.
The players at the Championships will be hoping to go to the English, Italian, German or Spannish Leagues, Scotland is going to low on their prioirities. Any player approached by Rangers will know, or quickly be made aware, that the club is presently insolvent. They will want their money up front and lots of it to go to Rangers.
I think it is pie in the sky and I am sure that at this stage most Rangers Fans are seeing that Green is insulting their intelligence.
Looks like he is alienating the Creditors, current playing staff and the fans.
Mr Green talks a lot and the more he talks the less convincing he becomes..
JUST AMAZIN THIS MOB ,BETTER THAN CORRY ,EASTIES ETC. ETC ………..I 4 ONE …….JUST CANT GET ENOUGH . ALTHOUGH I EXPECT FINAL EPISODE APPROACHING FAAAASSTT!!!!
Isn’t this all part of the ruse to entice Rangers fans to NewcoFC. Of course the CVA will fail, of course they can’t sign players, of course they will be liquidated. The only thing left is the customer base that Charles Green is courting with these promises.
It angers me further that they seem to find the money to fund their preseason matches in Germany. Can’t cost that much to sent the whole squad there on flights, hotel and food costs.
Anyway I’m sure this is in the creditors interests as they would want them enjoy a nice warm up to an unpredictable next season, if they still even exist.
Preacher Green appears to have a daily slot on the telly these days. His sermons have included:
1) The end is nigh for Scottish Football
2) I am the Messiah I will bring you glory and greatness once again.
3) Trust in me and you will reap great rewards
What a numptie! Forget about turning bread into wine – preacher Green can turns sh””e into millions lol
Pay the credtitors what they are due not pennies in the £
Sorry if I’m being totally thick here, but there is a lot of information about this whole saga and some of it is getting confused in my wee head!
Can someone tell me, IF the CVA is rejected and RFC are then liquidated, what would happen re any potential sanctions for EBTs, CoS, dual contracts etc etc – would this all go away as RFC are no longer an existing entity, or would any NewCo be liable to any punishments fixed for the OldCo?
Thanks!
Any footballing matters involving RFC (ia) will become an irrelevance post liquidtion as they effectively will have ceased to exist, as will their history. Any Newco formed will, or should be free of SFA/SPL sanctions regardless of statements by them to the contrary as there would be strong legal arguments which would definitely favour any Newco (completely different entity)
As for the EBT’s, this would most likely, following the FTT/BTC revelations, end up being a matter for Strathclyde’s finest as what appears to have occurred amounts to tax evasion. which is illegal, Lester Piggott found this out the hard way.
GlasgowGhirl
In theory newco would have no responsibility for any sanctions or penalties imposed on oldco. However, the SPL would be perfectly entitled to say to newco Rangers, that we offer to admit you into the SPL essentially conditional on newco accepting any sanctions imposed on oldco. Rangers would then have the option of saying either yes, we accept your offer and the conditions that go with it, and would then be subsequently barred from challenging their imposition on newco, or no we don’t accept your offer (which would mean no admittance to the SPL).
This is exactly what the Football League in England did in respect of both Leeds Utd and Rotherham Utd after their failure to exit administration via a CVA, and was upheld on appeal.
Bhoywonder
Sorry, but you are wrong. If the SPL choose so, the misdeeds of RFC(ia) will NOT be an irrelevance. As to the history being wiped out, that is wishful thinking. Many clubs, especially in England, have exited from an insolvency event via a newco, and no-one is saying that their history has ceased to exist. Indeed AFC Wimbledon are recognised as having the history of Wimbledon FC, even though that latter club is now technically MK Dons.
As for prosecution of the EBTs, don’t hold your breath.
Green is only giving them what they want to hear,a load of nonsense .They are rotten to the core and green knows it .He wants to liquidate them and get his hands on the assets ,why else would someone with no interest in scottish football want to get involved with bunch of thieves and cheats.
Although certain that talk of a list of 19 targets is simple propaganda, I disagree, Paul, that the rule you quote presents any practical obstacle to Rangers signing players at present. The rule does not mention categories – by this I mean reserve out=reserve in – and it does not take the brains of an archbishop to see the way forward, bearing in mind the numbers on Rangers staff.
Apparently Green has described Ibrox as his Church
http://news.stv.tv/scotland/105678-rangers-crisis-possibility-of-selling-ibrox-naming-rights-being-explored/
And you can buy the t-shirts on e-bay.
http://www.ebay.co.uk/itm/Football-My-Religion-Ibrox-My-Church-T-Shirt-/370226821365
He has certainly done his research on the fans.
Re the football is my religion/Ibrox t-shirt, eBay says: This seller is currently away until 17 June 2012, and is not processing orders at this time. You can add this item to your watch list to purchase later
Great idea, not sure the “church” will last til the lad’s back from his holibobs, but there you go.
As an aside, surely Ibrox less a church more a temple to Mammon – to greed, gluttony and pursuit of weath?
And still no apologies… please just go away and die
I see Reverend Green is proposing to sell naming rights to Ibrox now to raise cash. I would gladly approve a CVA just to see Mattel the US toy giant (producers of He Man toys) rename it Castle Greyskull for 20 million bucks.
Come Thursday Rev Green will be rolling about George Square in a shopping trolley, naked, covered in Marmite shouting “I invented the question mark and my arse is a cornflake!”
The man is either “aff his trumpet” or must have balls of titanium!
greens just like all the gers fans hes tripping out his tree 🙂
What does it matter if they can or can’t sign players whilst in Admin , when everyone seems to believe that they will be liquidated on Thursday ? hardly seems worth debating really.
If the CVA goes through , THEN it’s time to worry about it. Til then , chill……….
I think that the point is more that has even been put out to the media and to the fans like this, even before the CVA has been decided on. Nobody has come out and said sorry. As I said, the creditors are being offered a tiny pot, yet people are talking of bringing in players while in administration, and not just ANY players, INTERNATIONAL players – Martin Petrov’s name is being mentioned as a player they are interested in – and, if media reports are correct, they talk of getting them on the cheap because of the economic crisis in Europe, though they do have to remember the wage bill, the PAYE and the NIC.
They are wondering if they will be able to afford more than £20,000 a week for these players (£1 million a year to you and me), and they can’t pay off their debts to, not just the big creditors, but the little ones for whom £20,000 – even £5,000 – would be a huge amount, that is the problem.
There are over 230 creditors owed under £20,000 (66 of whom are owed between £5000.01 and £20,000). Now, having done my sums that would mean for the cost of ONE player at the £20,000 rate, you could easily pay off ALL the debt to creditors £5000 and under in less than a year. At the lower rate, it would be four players. I know it wouldn’t work that way, but I am making a point. I am trying to put some necessary perspective on things. It is the way we look at things that matters.
Then, of course, how many players do they actually have, and on what wages? I am sure I saw it somewhere, while they were negotiating the wage deferments. That, too helps put things in perspective, It would have been nice, as a gesture of goodwill for somebody to say, can we get the small creditors out of the way – maybe a whip-round amongst the players and directors (past and present), and the consortium Mr Green is talking about, and, maybe Messrs. Whitehouse and Clark could go round personally – in their own time, of course so as not to have to charge extra for their time – to each one of them, to help them understand that these are real people, for whom there are real consequences.
Of course, this is all a dream, and it doesn’t work that way but I hope you forgive this dream; sadly I do not see it coming true.
Posted on RTC – feel free to use as basis for a post
Can the £5.5 million sale stand?
Clause, definitions and figures are references from the CVA proposal, (“CVA”), dated 29 May 2012 unless otherwise stated.
This hypothesis presents the value of the transaction to Sevco of a failure of the CVA as opposed to the realisation scenario to Creditors presented in the CVA. The hypothesis does not seek to evaluate the CVA per se, but raises concerns in respect of the transaction proposed should it be rejected.
Similarly, the shortfall or otherwise for creditors of any description is not the purpose of this analysis.
On first examination, the sale is at less that stated distressed market valuation of assets.
In the interests of balance, some interpretations of the Estimated Outcome in the event of a successful CVA are presented in Appendix 1. These seek to apply possible interpretations of the CVA proposal to determine a pence in the pound offer. It is clear that the value depends significantly on the underlying assumptions.
This is a personal interpretation, and is based on the published documents of Duff & Phelps as the official documentation submitted to courts or creditors. The documents may contain consistency errors or omissions but as court or creditor documents it seems fair to assume that they are subject to rigorous quality control and can be taken at face value for evaluation purposes.
The author is not a specialist in Administration and freely acknowledges that all facts are not available for good reason. As such this can be no more than a simplistic viewpoint. It does perhaps serve as a reasonable prompt for clarity.
The published information states the following:
In the event of a failure to secure a CVA, Charles Green’s, (“CG”) transaction vehicle, Sevco is contractually bound to purchase the business and assets of Rangers.
4.23 In the event that either this CVA is not approved, or the other Conditions of the loan are not satisfied or waived by 23 July 2012, Sevco is contractually obliged to purchase the business and assets of the Company for £5,500,000 by 30 July 2012. All further terms of that sale have been agreed in advance and are confidential.
As these terms are confidential it is only possible to theorise how this transaction may be structured.
We know from the CVA proposal that the following assets exist:
Ibrox; Murray Park; The other heritable properties and leasehold interests of the Company
The Player Contracts; The SFA Membership; The Company‘s share in the SPL; The Goodwill and intellectual property rights; Stock, plant and equipment and cash at bank; Amounts owed to the Company (other than the Player Transfer Fees)
The High Court Proceedings; and The Player Transfer Fees
Player Transfer Fees are the amounts due in respect of players sold prior to 12 May 2012 where payment is due on or before 2 September 2013 unless the CVA is terminated prior to that date. This has a “factored” value of £2 million. The accepted usage of factoring is the discounted value realisable today in respect of future revenues.
Note the original report to creditors dated 5 April 2012 in clause 5.20 explains that half of the £5 million, (plus VAT) fee for Jelavic agreed on 2/02/2012 was deferred as 3 equal instalments due in May 2012, 2013 and 2014. The same document in clause 9.37 mentions fees due of £3.8 million in the period up to 31 May 2014. This would presumably include the aforementioned transaction. It is not clear from the CVA proposal whether the factored amount includes amounts due after 2 September 2013. A strict interpretation of the CVA proposal would suggest not. If this is the case it should fall to Sevco.
The “assets” comprising the High Court Proceedings have been quantified as £3.93 million (5.3) and in excess of £25 million, (5.5), less expenses. Both amounts are disputed. It is common that if successful costs are also awarded. Conversely an award of costs can be made to the defendant if they are successful, turning these “assets” into potential liabilities.
The CVA will terminate, assuming it does not fail, on conclusion of all court cases, including appeals. It is feasible, given that court proceedings are not scheduled to commence until between 1 and 31 October 2012 that the CVA may not terminate until after 2 September 2013.
Stock, plant and equipment seems likely to include the catering equipment over which it was originally reported in The Report to Creditors dated 5 April 2012 that Close Leasing held a fixed charge of £1.6 million. This charge is not specifically identified in the CVA proposal. The CVA may reflect better information correcting the position in the original CVA proposal.
Cash at bank would appear to be nil. Cash at the date of administration was 3.373 million. This has increased in the CVA proposal to £3.403 million. However the administration shortfall is estimated as £3.632 million as at 6 June 2012, a net liability of £230,000. For an asset deal, this means nil as the liability will not be acquired.
Debtors are listed in the CVA as being worth between £264,000 and £550,000. The accompanying note does cast significant doubt as to the realisation of these sums. In negotiating a business and assets deal a prudent purchaser would assign a minimal value. I propose a prudent value of nil.
The SFA membership and the share in the SPL are of indeterminate value at the present time. Potential value is Nil upwards. No doubt data can be generated to determine a value of either of these assets, but this is highly subjective and correlates directly with the value of the goodwill of Rangers Football Club.
The value of player contracts has been reported as being significantly eroded as a result of the negotiations to reduce salary entitlements. I have noted debate on whether player registrations will automatically transfer to a purchaser of the business and assets. In a non footballing environment the TUPE Regulations would apply. These regulations exist to protect employees but there is a paradox here as unlike most cases, the employees in this case, (if they are indeed employees), have a transferable open market value.
The debate on this aspect has petered out without a substantiated conclusion. Any prospective purchaser will have obtained a legal opinion. A worst case scenario is that they do not and are worth nil. Is it more likely to assume that the contracts can transfer, provided all terms are honored, primarily the payment of full salary and reduced transfer fees. This would result in a holding cost, and the net value could therefore be negligible if players are sold in the transfer window to eliminate / mitigate the holding cost.
The remaining assets have a draft book value of £125 million as at 30 June 2011. Much has been made of this value. It represents a going concern valuation which is not the same as an open market value on a forced sale. There is no value in seeking to reconcile the two, although it is worth noting that the £125 million includes £750,000 of investments of which we know that £223,000, (net of commission), has been realised but not received, (the sale of the Arsenal shares).
Investments may or may not be readily convertible to cash; for example it could be investments in subsidiaries or other shares of little or no value. Intangible assets have a value of £7.9 million. This may or may not include value attributable to the Rangers brand, (club badge, jersey design etc). The brand will have a residual value, if only in respect of the sale of memorabilia.
As an aside on the subject of club replica kit, a contract between Rangers and JJB Sports has been publicised in the past. The CVA does not mention this contract. The conclusion must be that it does not result in any guaranteed income, or the contract has been terminated, (by either party), or will not be assigned to Sevco.
Nothing would prevent Sevco from negotiating a fresh arrangement or retaining sole rights to a potential income stream. In 2006 the BBC reported that the contract was worth a guaranteed minimum annual royalty of £3 million, in addition to an up front payment of £18 million. It is reasonable to assume that the contract has rights and obligations on both sides. This could undermine the value in the event of an insolvency event or Rangers non participation in the SPL for example.
The open market value of these remaining assets, (made up of the heritable interests it appears from the CVA proposal) is £4.6 million, which represents the independent professional valuation less holding and disposal costs for a period of two years. I submit the fixed charge in favour of the Scottish Sports Council is irrelevant to Servco as it will not be transferred.
A prudent value attaching to Rangers based on the values and information contained in the CVA proposal can be advanced as follows:
Values per CVA Proposal to Creditors
Heritable Property 4,600
Player Transfer Fees 2,000
SFA / SPL 0
Goodwill 0
Investments 0
Realisable Value 6,600
Less Sales Proceeds 5,500
Apparent gain on purchase 1,100
Contingent Income
Replica Kit 0 Reported annual minimum is £3 million per annum
Player Registrations 0 Assuming transfer fees are only equal to holding costs
High Court Proceedings 0 Maximum value per CVA is £28.98 million less expenses
Debtors 0 Worst case scenario per CVA is £264 thousand
Total contingent income is £32 million less expenses of realisation. The £25 million claim against Collyer Bristow if successful must prove loss suffered. The £25 million appears to be based on an alternative course of action Rangers may have taken, being a share issue. Previous share issues were not widely subscribed. The debtor value is an amount claimed from Pritchards which is in administration with a shortfall of client funds. A prudent purchaser may take the view that the £25 million claim against CB would settle for costs to date with no award, and the dividend from the Pritchards administration will be immaterial, and not readily forthcoming.
A more realistic value of contingent income is likely to be less than the sum of the Replica Kit and the initial court case less costs. An additional value of £3 million seems achievable if Rangers is a going concern. It is difficult to conclude that all £3.98 million of the first High Court case will be subject to secured claims and not available to the company in administration. Whether this means that Sevco will obtain the funds in a business and assets deal is a more difficult question to answer.
However, if there is any merit in this hypothesis it does seem that Servco will realise value even if Rangers has no value as a going concern. An extremely successful client of mine when presented with any deal used to as “Whats the very worst that can happen?” On this interpretation, it’s a master deal by Mr Green.
Whoever cleans up the mess also stands to make an additional £1.1 million in fees if the figures proposed by D&P are correct. You can argue the detail, but everyone wins except the creditors and shareholders.
Whatever there is still uncertainty and perhaps an opportunity for increased transparency or explanation.
Appendix 1
A challenge to the CVA Estimated Outcome calculations.
At first evaluation, there is potentially a reasonable offer. Depending on which set assumptions applied it is evident that it cannot be dismissed out of hand in the absence of better information. It is relatively easy to assume a worst case scenario. It is much more difficult using the publicly available information to determine a realistic one.
A key aspect of the CVA may be the ongoing business plan, and no reliable information has been made available. One unknown is the impact of non payment of football creditors on future trading.
Note that the CVA will continue, assuming it does not fail, until the conclusion of all court cases, including appeals. It is feasible, given that court proceedings are not scheduled to commence until between 1 and 31 October 2012, that the CVA may not terminate until after 2 September 2013. Player Transfer Fees due after this date are not CVA assets.
This challenge extrapolates some of the details referred to above.
Also worthy of note is the fact that in the absence of “trading revenue” to fund the CVA trading costs, (estimated at £3 million in clause 5.12 of the CVA proposal), the shortfall will be paid from the “Excluded Assets” described in 5.4.12 and 5.4.13, (being the proceeds of the sales of season tickets for 2012/13 season and player transfer fees in respect of sales after 12 May 2012).
The administrators can request the use of these funds from Servco, who cannot “unreasonably” withhold their consent to the use of these funds in this way. In the event that there are insufficient funds from these sources, then these costs will have to be met from the CVA pot, (5.15 and 5.16).
Given the acknowledged sharp fall in revenue, (clause 5.12), it is difficult to ascertain where the estimated £3 million in revenue will come from. It seems likely that some or all of this will be met from the proceeds of season ticket or player sales, or in the worst case, the CVA pot. Lets assume that this cost will be covered from the future revenues detailed above and ignore the impact on the working capital of Rangers post CVA.
Regardless of the above, any sums due from the SPL, (including past prize money), plus TV revenue go to the post CVA Rangers and will not contribute to the CVA trading costs. It is not clear whether these sums will be retained to settle some or all football creditors.
Important Assumptions
The administrators can reduce their time commitments by in excess of 90%, administer the CVA and achieve some realisation in respect of the High Court cases together with receiving awards plus costs.
The £25 million case has to establish liability and prove loss, neither is certain, (see above).
The calculations assume that the debenture holders elect to retain their “benefits” and not prove as a creditor, (saving £7.7 million), ignoring the “requirement” to treat all creditors equally for HMRC to accept a CVA. How that applies when it works in their favour is unknown.
Figures Per CVA Proposal
£’000
Exclusivity 200
Servco Loan 8,300
Proceeds of Litigation 3,930 Collyer Bristow case settled with no cost awards. (See above)
Player Transfer fees 2,000
Debtors 112 Propose 50% of full amount due from Pritchards in administration, (£223 net of expenses)
Cash 3,404
17,946
Administration Shortfall -3,633
Administration Fees -3,000 Period 14 February to 6 June, (4 months)
CVA supervision -500 Period 14 June 2012 to 2 September 2013, ( 15 months)
Legal Fees -1,800 Excluding costs of realisation of litigation proceeds, (assumed)
Other -261
Prime Facie Funds 8,752
Legal Fees 0 Assume receive costs award
Additional CVA fees 0 Assume that a reduction in commitment in excess of 90% is consistent with D&P experience. (See below).
CVA Trading 0 Assume paid by trading revenue or season ticket /player sales.
Close Brothers -1,600 As per original creditor report, (not in CVA), secured.
Net CVA funds 7,152
Creditors (TBC) 54,696 Per CVA, (excluding BTC and interest from 29/5 to 14/6).
SFA fine for disrepute charges, (not in CVA) 160
Total 54,856
Distribution 0.13
BTC 75000 Estimate per original report to creditors
Revised distribution 0.06
Litigation proceeds revised to nil
No BTC liability distribution 0.06
BTC Liability distribution 0.02
Reduction in time commitment
Partner Rate 480 545
Manager / Director 305 480
Senior 195 305
Average 327 443
Total Hours in £500K 1,531 1,128
Hours per month 102 75
Hours per week 24 17
Minimum hours per month to date 1,376
Reduction in hours (Average) 93% 95%
It is simple to produce an interpretation of the numbers that results in a distribution of nil pence for a CVA where costs consume all available funds, particularly if court cases are pursued and lost. At some point the defendants will seek security for costs, and this may or may not be available.
It is equally possible however to paint a much brighter picture. In reality after the value has been extracted by due process the value for creditors is likely to be nominal and the question remains as to whether its better to reject a CVA which offers something in favour of a liquidation which will be double or bust.
(Lets assume that in the results of the creditors meeting 17.1.4 is required for the Administrators to carry out the administration. Now a CVA has been proposed 17.1.8 is the applicable authority. Anything other interpretation appears inconsistent / contradictory).
I want make a stab at what happens if the CVA is refused. Please correct me if I get any of this wrong. I am basing this on what I have read, not on any expertise in law or accounting.
1 The CVA vote is lost because 25% or more of the creditors value vote against it. A HMRC vote against is enough for it to fail.
2 HMRC appoint BDO to liquidate the assets.
3 Green gets first refusal on the assets. Is the 5.5m deal with Duff and Phelps now void?
4 The players are free to leave because their contracts allow them to leave if the Club is liquidated.
5 Duff and Phelp’s bill is questioned by BDO.
6 All punishments from the SPL and SFA are meaningless because the Club Rangers is liquidated.
7 After all the assets are sold BDO will distribute the monies to the creditors. I think though that there will be a lot of legal challenges to be heard before that. The total amount to be paid to creditors is subject to legal cases not yet decided.
8 Rangers will start up again as a newco club run by Green or whoever gets to buy Ibrox and Murray Park. Perhaps the blue knights or the fighting fund can make a bid?. They will apply to play in the SPL or failing that the 3rd division.
It is also worth noting the amount of protesting that will take place. The Rangers fans will I am sure feel hard done by.
Good summary mate. I reckon TBK or a similar fan group will look to purchase another club, look at St Mirren, £1.5m and then look to buy back or lease Ibrox from whomever paid the highest for it. Green’s gripe at his so called legally binding first refusal at the assets is solely with D&P and contradicts the creditor’s agreement (heavily influenced by HMRC) which D&P seemed to delay and hide. I strongly suspect Whyte (or his Da) will be involved at some point.
A new Rangers will emerge at some point but this will have hindered them for years.
looking forward to the Celts picking up their league titles they cheated to win, the SFA will take their time with this until Rangers are dead and then present their findings…
I strongly predict the results of the BTC to be put out this week, the last nail in the coffin.
BBC sport website CVA will be rejected by HMRC:
http://www.bbc.co.uk/sport/0/football/18407309
Following on from that, a statement from administrators Duff and Phelps:
‘We have been informed by HMRC they will not support the proposal for a Company Voluntary Arrangement at the meeting of creditors on Thursday, June 14. ‘As a result of this decision, the Sale and Purchase Agreement in place with the consortium led by Charles Green will take effect and Rangers Football Club will continue within a new company structure.’
Persistent, isn’t he/aren’t they?
Now, does the fact that HMRC are going to reject the CVA, mean that BDO will move in and take charge of the liquidation?
Was that not one of the condition changes made to the CVA by HMRC ?
For the record, Rapid Vienna have rejected it as well. They will be making formal complaints to UEFA and FIFA if necessary to get things sorted out.
Where the HMRC statement is quoted verbatim, it does not seem to coincide with either Green or D&Ps views, that the next step is the closure of the deal already agreed between them re sale of assets for £5.5M.
To avoid general anxiety, could Paul, or anyone with relevant expertise, please say, urgently, whether HMRC or any other creditor can block the deal
Preacher Green administered the last rites to RFC in his sermon today.
Hopefully HMRC will challenge the ridiculous valuation Duff and Duffer put on ibrokes and scupper the preachers plans for a newco.
Havin a party LOL
HMRC have indicated they are OK with A sale of the Club. I just hope it is not this buttons offer from Green they are allowing.
Here’s the sermon:
“Frankly, I do not see what benefit will be achieved by this decision. My consortium’s offer for a CVA amounted to a total of £8.5 million.
“Now that we will have to complete the purchase via the formation of a NewCo, the purchase price and therefore the amount available to creditors will be £5.5 million
…
“We will be exploring ways for the 26,000 shareholders who have lost their shares to subscribe for shares in the new company. We expect to appoint a private client broker in due course to allow existing shareholders and fans to buy into the new company.
“We will, however, examine how to address this with regard to shares in the new company.
“The solemn promise I can make to Rangers fans today is that this Club will continue as Rangers Football Club and will continue to play at Ibrox Stadium.
“We will be liaising with the football authorities at the earliest opportunity to establish our position regarding the SPL.
“I, along with my investors who believe that Rangers can have a bright future, will fight tooth and nail to ensure the Club recovers from this catastrophic phase in its proud history.
“The fans deserve better and we will work tirelessly to realise their ambitions.”
http://local.stv.tv/glasgow/105843-in-full-rangers-statement-on-cva-failure/
From the BEEB…The last paragraph is the important one…. Green has nothing, can you honestly believe all the clubs assets will go for £5.5m, they could get that for a couple of their players… They could get £1m for the iconic Ibrox gates… Green runs the risk of putting out money he will not get back (deemed void). A consortium of Ranger’s supporters will dig them out of the rubble and restart probably purchasing another club and renting Ibrox unless they are serious about that large Govan homebase..
“Once the voting formalities are over, the tax authority will appoint joint liquidators from BDO to wind up the 140-year-old football club.
The liquidator has powers to examine the governance and administration of the club before its insolvency and report on any issues he feels should be raised with creditors.
Among these powers, include the right to apply for a court order to examine, under oath, people involved with the company.
The liquidator can also sell the assets and the business to pay off the debts and undo any dealings or trading which he deems to be void.
“
But, we have this, also from the BBC:
“Rangers to re-form after creditors’ deal is rejected”
http://www.bbc.co.uk/sport/0/football/18407309
Are they trying to pre-empt the actions of HMRC, and if they are, can they succeed? They certainly seem to think that they can go ahead.
well put jim bhoy lets get them under oath lol
were having a party rangers have died were having a party rangers have died pmsl lol haha pass the chocolate sprinkles gess a wafer as well
Ignore this, It is probably a hoax article. Delete it if you can.
An interesting view of things from Alex Thomson, Channel 4.
http://blogs.channel4.com/alex-thomsons-view/rangers-taxman-walk/1899
Can someone maybe clarify re the sale of the club’s assets to Charles Green.
If BDO come in and say it’s not the best deal available can it be stopped?
I personally think this just opens one very large can of worms and to use the Johnny Nash lyrics at this stage “There are more questions than answers!”