And now, the end is near
And so I face the final curtain
The words sung most famously by Frank Sinatra, and written by Paul Anka, came to mind as I leafed through the Duff & Phelps Progress Report to Creditors published recently.
Indeed, as I reached the finish, the words of the famous poet Joey Tempest seemed to echo round my head:-
We’re leaving together
But still it’s farewell
And maybe we’ll come back,
To earth, who can tell?
I guess there is no one to blame
We’re leaving ground (leaving ground)
Will things ever be the same again?
It’s the final countdown.
The final countdown.
Somehow the vision of Messrs Clark and Whitehouse clad in leather and with blonde-tinted mullets is one I now can’t shake.
But, it is true. The end, for Duff & Phelps as administrators of Rangers, is near. We are on the Final Countdown.
So what have Duff & Phelps accomplished, and what happens next?
The Report helpfully reminds us of the statutory “purposes of administration”.
“…the Joint Administrators must perform their functions with the purpose of achieving one of the following hierarchical objectives:
- Rescuing the Company as a going concern; or
- Achieving a better result for the Company‟s creditors as a whole than would be likely if the Company were wound up (without first being in Administration); or
- Realising property in order to make a distribution to one or more secured or preferential creditors”
Do D&P think they achieved the aims of administration? Yes!
“As part of a wider agreement with the Joint Administrators which was finalised prior to the CVA meetings, Newco was obliged to purchase the business, history and certain assets of the Company should the CVA fail. Accordingly a going concern sale to Newco completed shortly after the meetings, which has resulted in the Joint Administrators achieving the second objective identified on the previous page, as a better result for creditors has been achieved than if the Company had been wound up without having first being in Administration.”
D&P address the SPL Independent Commission, saying:-
“As stated in the Joint Administrators’ recent press release, based on legal advice, their opinion is that, as confirmed by the SPL’s solicitors, the Commission is appointed under the contract between the SPL and its member clubs. In the Company’s case, this contract was terminated when the Company ceased to be a member of the SPL. The Joint Administrators do not therefore propose for the Company to participate any further in the Commission’s activities as this would not appear to be in the interests of the Company’s creditors”.
Good to see them ending thinking about the creditors!
It might have been appropriate for them to answer the opinion issued by the Nimmo Smith Commission which rejected the argument that end of the contract meant no action could be taken, but it was not to be.
The litigation between the administrators, Collyer Bristow and Gary Withey, erstwhile Company Secretary, deserves a post of its own, so I will pass over it for now.
In tidying up loose ends, the Report refers to the Big Tax Case.
“The Big Tax Case is disputed by the Company and is subject to a first tier tax Tribunal. An outcome has yet to be determined by the Tribunal and is currently expected in October 2012.”
When writers like Phil Mac Giolla Bhain and RTC started laying out the story of Rangers and its tax affairs, few thought that this would result in the liquidation of the company – no one believed that this would occur without the tax case being decided! Yet here we are.
The decision is expected this month – there is speculation about the amount of redaction of the judgement going on, a process that involves more than a magic marker across the page!
However, the mere fact that details of personal tax affairs might be disclosed is not reason for hiding details – just read the decision of the Tax Tribunals published daily.
Turning in detail to HMRC, the report states:-
The Joint Administrators have continued to review the claims made by HMRC in the administration. The claims are largely made up of determinations issued by HMRC in accordance with Regulation 80, penalties and outstanding PAYE/NIC. The Joint Administrators have adjudicated on these claims and confirmed to HMRC that for voting purposes, their claim will be admitted for voting purposes at £94,426,217.22.
It is correct to say that this is not a formal admission of liability but an acceptance of the potential liability. However the administrators have a duty to consider claims made and take a view about the likely liability.
We see this in the next section:-
The Joint Administrators have continued to investigate the claims made by Ticketus in the administration. The evidence available to the Joint Administrators suggests that the claims made by Ticketus against the Company are unenforceable. The Joint Administrators have taken advice from both solicitors and counsel in both England and Scotland on the validity or otherwise of the claims. The advice received is to the effect that there are a number of grounds on which the claims can be disputed in full. Following the legal advice received, the Joint Administrators consider that the claims made by Ticketus should be rejected in full for voting purposes. Ticketus have been given notice of this decision.
I will post later on the Ticketus issue, which is of interest legally, tied in as it is with the Collyer Bristow case, and from the conspiratorial point of view, as people find it hard to believe that a company would allow an investment of £27 million to go down the plughole without trying to do something about it!
For this post, it should be noted that the administrators have declined the Ticketus claim in its entirety, confirming that they have discretion as to how they operate the voting process for creditors.
Moving to the finish, the administrators propose to act as follows:-
It is the Joint Administrators’ opinion that no better realisations will be made in the Administration than could now be made in a winding-up and therefore, in accordance with the Joint Administrators’ Proposals with modifications, the Joint Administrators will now take steps to place the Company into Liquidation.
Accordingly it is the Joint Administrators’ intention to make an application to the Court of Session, under Paragraph 79 of the Act, for the Company to move to Liquidation by the presentation of a winding up petition and the immediate appointment of Malcolm Cohen and James Bernard Stephen of BDO LLP as Joint Liquidators.
This application will be made after the meeting of creditors to be held by correspondence on 12 October 2012, as noted above in section 14, and this report will constitute the progress report to accompany that application in accordance with Rule 2.46(1) of the Rules. While this report is termed a Final Progress Report and it is intended to be treated as such, the report is provided to all creditors subject to any orders that the Court may make on the application to discharge the administration order.
The Joint Administrators will seek an order of the Court, inter alia, to effect that:
The appointment of the Joint Administrators shall cease to have effect, and;
Malcolm Cohen and James Bernard Stephen shall be appointed Joint Liquidators of the Company, and;
That the court shall determine the remuneration and outlays of the Joint Administrators.
That all seems straightforward – but there remains one issue which seems to have been overlooked, or at least not mentioned.
You might recall that Lord Hodge ordered, in June, that he wanted a report from D&P about the alleged conflict of interest in connection with the pre-administration dealings of D&P and its predecessor MCR with Craig Whyte. The report was produced to the court some time ago.
There are 2 possibilities:-
1 the report satisfied Lord Hodge
2 the report did not satisfy him.
If it had done so, then one thinks D&P would have announced this. After all, the allegations made about its dealings by the BBC resulted in threats (as yet unfulfilled) of legal action. Surely, if “cleared” by the Court, then this result would have been trumpeted by them, and been coupled with a court action for libel or defamation against the BBC.
The question which has been unclear to outside viewers has been the delay since the sale of the assets to Sevco. What on earth have D&P had to do since mid June?
As I wrote before, the charges accruing had slowed to £60,000 per week. Has the delay caused further losses to the creditors?
The BDO minibus must still be sitting with its engine revving, ready to head for Ibrox.
Will that bring questions from them as to what “adequate consideration” would have been? And will this be hanging over any potential share issue by Mr Green?
So as D&P prepare to leave, the words of the song come back to mind, and I imagine Clark and Whitehouse singing loud and proud –
The record shows I took the blows
And did it my way!
Posted by Paul Sinatra McConville