Whatever Happened to Duff & Phelps and its Conflict of Interest Investigation?

On 22nd June Lord Hodge dealt with a hearing into the administration process of Rangers Football Club PLC (as it then was).

The BBC reported the outcome as follows:-

The issue over any possible conflict of interest was raised by Lord Hodge at a hearing about the administration process on Friday. The judge said he took no view about what the BBC had said, but wanted to know whether Duff and Phelps had obtained and acted on legal advice on the question of conflict of interest. Lord Hodge said he had done nothing until now because he did not want to hinder the process of Rangers seeking a creditors voluntary agreement (CVA).

But, he told the accountants’ lawyers: “There is considerable public interest in this jurisdiction in relation to the administration.”

Lord Hodge added: “I do not want the administration to come to an end without having received that report.”

The report demanded by Lord Hodge is expected to be ready in three weeks and a further court hearing is likely to be arranged after that.

(As a side issue, I will point out that “CVA” is not accurately described above by the BBC, but actually stands for Company Voluntary Arrangement.)

Since June, apart from the declarations at the time by D&P that they welcomed the investigation as being a chance to clear their name (I paraphrase) not much seems to have happened.

The 10 July report to creditors by D&P said:-

The corporate entity which remains under the control of the Joint Administrators i.e. the Company, will be placed into CVL once all outstanding issues have been attended to. It is likely to be several weeks before this occurs.

There have been certain unsubstantiated reports in the media, notably from the BBC regarding an alleged conflict of interest concerning the Joint Administrators and Duff & Phelps. Regrettably gross factual inaccuracies featured heavily in media reports. Following the broadcast of a BBC television program which made reference to this matter, Lord Hodge requested the Joint Administrators to provide information to the Court of Session regarding Duff & Phelps prior involvement with the Company and detailing the Joint Administrators’ conflict review procedures which were undertaken prior to the Administration. This report is in the process of being prepared.

A detailed letter setting out the same has also been provided to the Joint Administrators’ regulatory body.

It should also be noted that upon appointment the Joint Liquidators will review the conduct of the Joint Administrators. The Joint Liquidators are an independent accountancy firm nominated by the creditors of the Company.

The Joint Administrators have an ongoing responsibility to consider whether any conflict of interest exists. They are confident that the above processes will confirm that no conflict of interest existed in relation to the Administrators’ conduct.

The 24 August report to creditors by D&P said:-

The remaining issues relating to the Administration trading period are being finalised and will either be concluded by the Joint Administrators or during the Liquidation by the proposed Joint Liquidators, Malcolm Cohen and James Bernard Stephen of BDO Stoy Hayward LLP.

They also said:-

The Joint Administrators have provided a report to the Court of Session regarding Duff & Phelps’ prior involvement with the Company and detailing the Joint Administrators’ conflict review procedures which were undertaken prior to the Administration. A similar report has also been provided to the Joint Administrators’ regulatory body, the IPA.

So, in mid July, it was likely to be “several weeks” till BDO took over. Here we are ten weeks later with no news.

BDO wait, poised to take over as liquidators of Rangers 2012 PLC at a moment’s notice, as they have been for a looooong time

At first it was rumoured that Lord Hodge’s return from holiday was the determining factor regarding the scheduling of the hearing which would, it appeared, release the administrators and appoint the liquidators. However he has been back for some time now, and yet we have had no hearing and no apparent news.

Why could this be?

The administrators task is all but done. They have sold the “business and assets” of Rangers. All they are doing, it seems to the outside world, is counting the money as it dwindles due to costs, and deciding not to turn up at the SPL Independent Commission. Why is there a delay in BDO stepping in with the liquidation?

The important quote from Lord Hodge: “I do not want the administration to come to an end without having received that report.”

He has received the report, it would appear. Therefore the possibilities seem to me to be as follows:-

He is very busy, which he undoubtedly is, and has not yet had the chance to consider the report, even though this delay is causing additional costs to the creditors, as the administration continues.

He has considered the report and is satisfied that D&P are innocent of any wrongdoing. It has simply been impossible to have a hearing scheduled to finalise matters. The Court of Session vacation has been running for some time, and is now over, but I am sure a simple hearing could have been fixed.

The Insolvency Act 1986, Schedule B1, states at Para 79:-

79(1) On the application of the administrator of a company the court may provide for the appointment of an administrator of the company to cease to have effect from a specified time.

(3) The administrator of a company shall make an application under this paragraph if—

(a) the administration is pursuant to an administration order, and

(b) the administrator thinks that the purpose of administration has been sufficiently achieved in relation to the company.

(4) On an application under this paragraph the court may—

(a) adjourn the hearing conditionally or unconditionally;

(b) dismiss the application;

(c) make an interim order;

(d) make any order it thinks appropriate (whether in addition to, in consequence of or instead of the order applied for).

This would appear to be what has happened already, as the administration was pursuant to an administration order and D&P consider that the purpose of administration has been achieved.

On that basis Lord Hodge exercised his power under para 79(4)(a) to adjourn the hearing.

All of the above leads me to suggest that Lord Hodge has not been satisfied by the report (which is some way from saying that he thinks there has been a conflict of interest) and wants more clarification or explanation. In that event a hearing would need to be set down for argument and evidence, if required, and it is likely to be that which is causing additional delay.

I have not seen any comment from D&P after the 24 August report. I wonder if a journalist could ask them what the position is?

All of this could have a bearing on the SPL Independent Commission too. The issues raised in the fourth charge against Rangers, which is that they obstructed, or at least failed to co-operate with, the SPL investigation are serious. It is not the job of an administrator to “obstruct” a regulatory body in exercise of its duties. The obstruction, or delay, or failure to respond is treated often more seriously than the original matter, as I am very well aware.

In addition the imposition of a financial penalty on oldco, which is possible, might involve the liquidator, if then in place, fighting the matter to avoid further harm to creditors.

If BDO appear shortly, they might be forced to seek a delay in Lord Nimmo Smith’s Commission so that they can consider matters properly. At the same time D&P could find themselves in the position of having refused to engage with the proceedings as administrators of Rangers, but find it necessary to become involved to protect their own reputation!

So, where are we?

I suspect that we will shortly hear that Lord Hodge has set down a date for D&P, and probably Mr Grier of that company, to appear before him to explain matters. In addition it might be that Mr Whyte could be asked to appear as a witness, but I suspect that the thought of Edinburgh on a dreary Friday might persuade him to remain in Monte Carlo, or whatever fleshpot he has found himself in whilst contemplating his time at Ibrox.

On the other hand, Mr Whyte might believe that D&P took his shilling, and then reneged on the deal, as per the abortive fee cap. In that case, an appearance in court to lay out his position clearly would be very interesting – another day for selling tickets to the Outer House!

It is of course possible that the delay has been brought about simply as a result of there being extensive communications back and forth seeking to resolve the issue. If I was a creditor I would be asking, politely, what on earth is happening!

Posted by Paul McConville



Filed under Administration, Insolvency Act 1986, Rangers

19 responses to “Whatever Happened to Duff & Phelps and its Conflict of Interest Investigation?

  1. TheBlackKnight

    There was a lot of talk in the MSM of Whyte/Collier Bristow being sued by D&P. Wonder how thats going 😉

    • Thats progressing but as insurance companies are also involved on an indemnity basis then it will drag. That matter is “reasonably straight forward” as its to do with the undertaking provided by Collier Bristow to RFCG and D&P are seeking the remaining funds that were not transfered to RFCG on behalf of the creditors.

  2. mick

    great read paul d&ps seem very odd and hodge has noticed something maybe thats an issue also bdo are late ,the paperchase is well hotting up and soon a think we will get a fuller pic of it all its the police a would like to see more involved as there is crimes here left right and center

  3. Chriske

    My Uncle Johnny (who knew everything and never lied) once told me a story about Stanley Matthews. The story went that whenever Blackpool played Bolton, Stan would look at the Wanderers team sheet and if he saw Malcolm Barras’s name on it, he cried off. Allegedly. Perhaps something similar is happening at BDO who may take a look at some of the names involved in the Rangers shambles and suddenly feel the collective need to rush to the loo. Now that the Summer holidays are over, there seems little reason to continue giving the Rangers job a low priority. We shall see, I guess.

  4. Ernesider

    Not so long ago BDO were being seen as the Cavalry coming over the hill lead by John Wayne, to sort out all the wrongdoers. I was sceptical then, even more so now.

  5. There are as we have said all along, many “minor ” points arising that need clarified a lot of them would/will influence the unravelling of the mess. I doubt many of them will be addressed as its in everyones interest to sweep it under the carpet and move on.

    At the moment we have CG raving again today in the sun about SPL/SFA. If he needs to appeal he needs to appeal to the SFA assuming he does nt agree with any additional penalties but calling both into question about their conduct……quite incredible he won t represent the club but is already to appeal to the people who he is having a go at and does nt trust. How mad is that? The way he is dumping on SPL its obvious he knows he won t be around to see TRFC back in SPL.

    There are more law lords involved in this matter than I recall any other company dispute in Scotland and maybe even the UK, but the MSM remain silent, preferring to regurgitate old news that was revealed months ago instead of asking ANY questions of ANYBODY…………………..only in Scotland and only around the rangers could this happen.

    • ecojon

      @ michaelk1888

      And Ally is back on the news tonight saying the medals ain’t getting stripped and MSM run it without asking SPL or SFA for a comment. OK they would probably get a ‘No Comment’ but FFS make the effort.

      The other thing both BBC and STB should be asking themself is: Hello, Hello! Is this not the same story we arn from Ally months ago? Ally says he’s tired hearing about it – I’m tired hearing Ally talk about it.

      I wonder if this SFA announcement which should be released tomorrow at the latest might have something to do with D&P although under than putting things on ice I can’t really see what else it could be.

      Rangers fans are working themselves into a frenzy expecting a cave-in and collapse of the SPL and SFA and the control of Scottish Football being handed to the SFL. All you hear is Charlie’s keeping his powder dry and going to destroy the suits.

      Dream On 🙂

      • robertg

        Obvioulsy a lot of lawyers in here. Great posts and analysis.

        Is Comical Ally’s ranting not akin to a bank robber declaring that he won’t hand back a penny of the cash, and by the way don’t even be thinking about that jail. It is beyond bizzarre.

        Keep up the good work, guys like you, Phil MGB and CQN make the internet a happier place.

  6. Greg72

    An excellent post – as ever- Paul!

    First – once again – what about the poor bloody creditors?!!

    Secondly – I am somewhat surprised to ‘see’ that we haven’t yet ‘seen’ the D & P Report to the Court of Session (Lord Hodge).

    Thirdly – as I understand it, the Liquidators (BDO) are not able to assume office until the Administrators have left office. I think it is the Court of Session that will decide that date.

    Fourthly, I am keeping an eye on the Scottish Courts website – as I suspect you are, Paul – to see when an Opinion by Lord Hodge appears.

    Fifthly, if my memory is correct, there was a referral to the Insolvency Practitioners Association (‘IPA’), being the regulatory body for both the Administrators. Naturally, the IPA wouldn’t publicise anything until its investigations were complete. However, I’m wondering when these might be completed.

    • iain

      “First – once again – what about the poor bloody creditors?!!”

      Yes people on here are really concerned about those.
      Except when the subject of the missing £2,5million prize money and 300,000 euro European Championship money comes up.

      • yes what about the creditors……..how could the club fail in the first place? ask yourself that and then consider that they still (olco) have liabilities to settle, as a RFC fan I would be more worried about then creditors that are piling up under current ownership, when it goes pop Murray and Whyte will seem like amatuers.

      • carl31

        Yes indeed, that could have been used to pay some creditors.

    • Brian J

      Have just opened the link and read Charlie’s rant. What a piece of nonsense. It is based entirely on the presumption that a continuing club equates to continuing membership and has no regard whatsoever to the rules of both the SPL and the SFA governing membership.
      It absolutely does not follow that because LNS rules that the club has continued that the club’s membership of the SPL and of the SFA continued. These bodies have rules regarding membership and when it it lapses. The continuing club that is RFC fell foul of those rules and ceased to be members.
      It is yet another PR blitz aimed at rousing the faithful and it will most likely work because the MSM will churn it out without any critical analysis or questioning of the author.

      • carl31

        LNS set out as an opinion, the principle of RangersFC without legal personality. Thats not a ruling and its for the purposes of the commission.

        • iain

          Yes…for the purposes of the SPL and SFA seeing Rangers as the same club as they have always been, for the purposes of the SPL and SFA being able to impose sanctions on the club.

          Or put another way…so the SPL and SFA can have their cake and eat it.

  7. Gobsmacked

    The Judge didn’t want to “hinder …… the process of a CVA.” Surely the point was to ascertain whether D&P had acted unprofessionally in that there was a conflict of interest. On the upside the investigation would prove that D&P were not guilty, how could that hinder the process? Were they to be found guilty then of course it could possibly hinder the process. So the only reason to delay for that excuse is that it was considered possible that they might be guilty. They say that the Law is Blind, but tying her hands and gagging her ! With all the versions of the truth, it certainly is 50 Shades of Grey.

  8. John Burns

    Day in and day out, Green, McCoist et al, drag the name of the SPL and the SFA through the mud for their own purposes – they know that ‘mud sticks’ and are therefore throwing as much as they can to get a ‘bigger mud-stick’.

    All this is done apparently under the nose, and with the approval of the SFL, now spoken of as their ‘bosum buddies’

    What is Longmuir and Ballantine’s position here, after all they are members of the SFA; surely they should be disciplining their own members?

    Lessons must be learned from all the shenanigans that has come to light with the SPL/SFA trying to do Sevco a favour and parachute them into Division 1.

    So, from now on,follow the rules and the strict legal path – perversely, this may suit Green, who will look to blame the governing bodies when he collapses the football side of his venture in favour of the property deal that he really wants to develop.

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