In which I wonder what Duff & Phelps are still doing at Ibrox, apart from apparently running a website and a bank account for Sevco, and also explain what happens to Rangers PLC’s SPL share, if the SPL members refuse to register the transfer of the share to Sevco.
I also suggest a way for Mr Green’s Sevco to make some money – he could charge Duff & Phelps rent!
Today Messrs McCoist and Green issued a statement via the official website of Rangers Football Club PLC (In Administration). I will address it in my next post, but for now there is an interesting point about the website, and a wider one regarding corporate identities.
Rangers.co.uk has the following statement, in very small print, at the foot of each page:-
“The Rangers Football Club plc (In Administration) (“the Company”). The affairs, business and property of the Company are being managed by the Joint Administrators, Paul Clark and David Whitehouse, who act as agents of the Company and without personal liability. They are both licensed by the Insolvency Practitioners Association.”
There is also a copyright notice, which states:-“© Rangers Football Club 2012”.
When coupled with the news that the proceeds of sale of season tickets for 2012-2013 are being paid into the bank account of Rangers Football Club PLC (In Administration), rather than into the bank account for Sevco 5088 Ltd or Sevco Scotland Ltd, one could be excused for some confusion.
A Quick Recap – The Dramatis Personae
The company called “The Rangers Football Club PLC” is in administration and is being run by Duff & Phelps. I will refer to this entity as “Rangers PLC”. It will soon go into liquidation and the liquidators, chosen by HMRC, will be BDO. Everything that Rangers PLC owns has been sold to a newco run by Charles Green.
Rangers Football Club, which I will refer to as “Rangers FC”, is the football club. The precise status of it is disputed. It has no separate legal or corporate identity. There is no legal entity called “Rangers Football Club”. However, it is argued that the football club has a separate existence from that of the “corporate shell” which owns it, and even if that company fails, as it has, the “Club” lives on.
Sevco 5088 Ltd is the company which has bought the whole “assets and business” of Rangers Football Club from D&P. At least we think that Sevco 5088 Ltd has done so, as this is what was trailed by D&P in their CVA proposal. However, their report of the creditors’ and shareholders’ meetings which saw the CVA rejected refer to the presence of Mr Green of Sevco Scotland Ltd, which is a separate entity from Sevco 5088 Ltd. Which of the companies owns what pieces of Rangers PLC is unclear. I will refer to both Sevco companies as “Sevco” until these matters are clarified.
Mr Green has also made clear that he wishes Sevco to trade as “The Rangers Football Club”. Whilst Sevco can trade under that name, it being part of the intellectual property acquired from D&P, he cannot rename Sevco as “The Rangers Football Club PLC or The Rangers Football Club Ltd, as there is still in existence a legal entity by that name. It will require the process of liquidation to be completed, or for the liquidators to consent to such a change of name before the corporate body, now Sevco, can take on the same corporate name as the former owner of Rangers FC. That re-naming however does not mean that Sevco is a continuation of the former Rangers PLC. Legally, they are totally separate, although the plan is to be of the same name, carrying out the same business, from the same address and with the same customers!
Sevco would reject any suggestion that it was a continuation of the former Rangers PLC. If it stated that it was such a continuation, then the creditors of the former Rangers PLC would be making an orderly queue at Ibrox looking for payment of the debts due to them. Sevco will not voluntarily take on responsibility for the debts of Rangers PLC. It has no legal obligation to do so.
As an extra factor to ensure that there can be no suggestion that Sevco + the former Rangers PLC, that entity is still owned by a combination of Rangers FC Group Ltd, Mr Dave King and 26,000 individual shareholders.
Sevco has acquired the assets of Rangers PLC. However, as yet, this does not include the share in the SPL presently owned by Rangers PLC. The proposed transfer of the share is to be voted on by the SPL clubs on 4th July with eight votes in favour being required.
Does Sevco = Rangers FC?
As I mentioned in a previous post, the rules of neither the SFA nor SPL are clear about the difference, if any, between a Club and the company owning a Club.
Sevco however is clear that Rangers Football Club continues to exist, even where there has been a transfer of “the assets and business of Rangers Football Club”.
The 4th July meeting is to determine if the change of ownership of the SPL Share from Rangers PLC to Sevco will be approved. It does not take effect until approved by the SPL members. If it is approved, then Sevco would be the owner of a share in the SPL and Rangers FC would participate in the SPL in the coming season. Such participation would though be subject to decisions in the ongoing disciplinary investigations and proceedings. The SPL has said that it has put the investigation into Rangers Football Club playing incorrectly registered players in hundreds of matches on hold whilst the “future status of Rangers FC is determined”.
The Sevco position is clearly that Rangers FC continues, even if the former Rangers PLC does not. Therefore the history of Rangers FC is “owned” by Sevco, and apart from the change of corporate shell, all is as normal.
Such a clear position however should mean that the delay in the SPL investigation should be short. If Sevco is Rangers FC, then Sevco/Rangers FC can be penalised for the wrongs done by Rangers PLC/Rangers FC. If Mr Green tries to argue that his Rangers FC is not the same as that owned by Messrs Whyte and Murray, ten it cannot be punished, but that means it is a new football club, as well as a new company, and would be starting life from scratch.
The SPL Share Vote
As matters stand, it is expected that the vote will go against the transfer of the share. Sevco will not get the eight votes needed. What happens then?
If the SPL refuses to register the share transfer, then the share transfer will not take place. Rangers PLC would therefore still own an SPL share, but would no longer by the owner and operator of a football club, nor the owner of a ground. Accordingly Rangers PLC would no longer be entitled to be the holder of a share, but it would still have it.
Sevco would own a football club, if we view it as having a separate existence, and a ground. But without the SPL share it cannot play in the SPL. That would leave it with two choices. One would be to seek admission to the SPL as a new club, but that would not succeed if the share transfer was already rejected, or else Sevco will need to seek a place in the SFL, as I wrote about yesterday.
The Share would still be in the hands of Rangers PLC. Having sold off the assets and business, D&P could not try to find someone else to buy the share, unless of course the person doing so already owned a football club! If I owned Albion Rovers, for example, and won the National Lottery, I could try to buy the SPL share from D&P and in one bound, if approved by the rest of the SPL, the Rovers could leap into the top division. That would not mean that the Rovers would have to move to Ibrox, as Sevco now owns it, nor would it have to change its name to Rangers, as Sevco own the rights to that name too. I would expect however that the SPL would also reject such a share transfer. Promotion to the SPL involves actually winning games, not being able to write a cheque!
So D&P are sitting with a share that it cannot move on. The SPL would then invoke Article 14 whereby, at a General Meeting of members, a resolution would be passed ordering D&P to transfer the share, for the price of £1, to the new owner, who would be either Dundee or Dunfermline. If D&P fail to sign the transfer papers within seven days, a Director of the SPL is authorised to do so, and thus the team newly admitted to the SPL would have their share.
What Have D&P Still to do?
D&P’s duty is to the creditors. As it is accepted that the purposes of administration cannot be met and that a liquidator will be appointed, D&P are basically tidying up loose ends until the liquidation takes effect. This includes writing a report for the Court regarding potential conflicts of interest, which I will write about later.
‘But there should not be much more to do, as all employees of Rangers PLC have either been transferred across by TUPE to Sevco, or if objecting to TUPE are no longer employees. Now Rangers PLC does not own Ibrox. Sevco does.
However, as mentioned above, the proceeds of season ticket sales are being paid to Rangers PLC and not to Sevco, as a result of Sevco’s difficulties with banking arrangements. This means that Rangers PLC’s bank balance is increasing. However there are potential issues for both D&P and Sevco here.
It is not normal for a company to use administrators of another company as its bankers. One of the issues here has been that of D&P’s fees. If D&P’s costs exceed what is left in the pot when the administration ends, then if they have handed sums over to Sevco there could be issues raised by creditors regarding this. The money of newco should not be anywhere near the bank of oldco. There is a risk of damage to creditors, D&P and Sevco by doing so, as well as the mistrust this has caused amongst some Rangers supporters too.
Are D&P taking the interest accruing on these sums? Are D&P charging Sevco for acting as bankers for them?
In the same vein, what is the position with the website? Is it now controlled by Sevco, in which case the disclaimer from D&P should come off it. If not, then what business has the administrator got in running the website which has, presumably, been sold to Sevco?
What is the entity “Rangers Football Club” which has the copyright notice in its name? If someone plagiarised the site, who would take court action? “Rangers Football Club” as opposed to “The Rangers Football Club” does not exist as a legal entity or as a trading name.
If D&P are now in charge of the website for Sevco, are they being paid for doing so? Presumably, as with looking after the Sevco bank account, the creditors of Rangers PLC should not have to pay for that!
On the other hand, as Rangers PLC no longer owns Ibrox, has Sevco sought payment of rent from the administrators for using its premises? Maybe that is the quid pro quo – that D&P can continue to use Ibrox for the administration process for no charge, whilst carrying out that work for Sevco. However, it all seems just a little inappropriate for an administrator.
Of more importance are the legal issues regarding the players and employment contracts, which will be discussed in my next post.
Posted by Paul McConville