World Exclusive! – Ticketus Try to Liquidate Craig Whyte’s Main Company, Liberty Capital

I have commented on matters of Scots law, as per the name of the blog, and English law. But, so far, I have not mentioned the law applicable to the British Virgin Islands.

But that changes today!

Ticketus, who successfully won a court order against Craig Whyte, have now applied for the liquidation of Liberty Capital Ltd, the BVI company which owned 100% of Wavetower Ltd which was the vehicle used to effect Mr Whyte’s purchase of 85% of the shares of Rangers Football Club PLC (oldco) which was in turn as we must now know it, the company which formerly owned the assets and business of Rangers Football Club (whew).

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Mark Daly Reveals Rangers’ “Smoking Gun” – Craig Whyte Taped David Grier of Duff & Phelps

Mark Daly of BBC Scotland has produced another chapter in his revelations regarding the events surrounding the administration of Rangers Football Club PLC. Following his two previous programmes, and his Scottish BAFTA nomination, he was on Reporting Scotland tonight.

The details can be read on the BBC website here.

The story tonight was based upon recordings made by Craig Whyte in a meeting with David Grier of Duff & Phelps. If Mr Whyte has been regularly taping meetings and calls in this process, one wonders if there might be people, in addition to Mr Grier, who are rather worried tonight.

Mr Daly’s previous programme in May prompted the issue of a statement by Duff & Phelps. The article, which was on the official Rangers website here – http://www.rangers.co.uk/news/football-news/article/2786614 – is no longer there.

However, I have a copy of it and the relevant extracts are below. You can read the full statement, and my comments on it here – https://scotslawthoughts.wordpress.com/2012/05/26/some-questions-for-david-grier-and-the-administrators-of-rangers/

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David Grier, who was the engagement partner at MCR, said: “I categorically deny that at the time of the Craig Whyte takeover of Rangers, I had any knowledge that funds from Ticketus were being used to acquire the Club. This accusation is wrong, highly defamatory and betrays a lack of understanding of the facts.

Rangers + Ticketus – Part 3 – Loans, Sales, Financial Assistance and Unjustified Enrichment

On Friday Lord Hodge issued his decision in the application by D&P for “Directions” in connection with their handling of the Rangers administration.

Prior to going into the bulk of my post, can I suggest a visit here for another, but different, legal perspective on why a Rangers “fire sale” is the most likely outcome?

Back to the regularly scheduled programming –

From Lord Hodge’s judgment I have extracted the following section:-

[16] The administrators’ legal advisers have challenged the enforceability of the STA (Season Ticket Agreement). It envisaged that Rangers would use the payment for the first tranche STA tickets to effect the repayment of its debt of about £18 million to Bank of Scotland plc. It was also proposed that Rangers would lend £16 million to Wavetower Limited (now called The Rangers FC Group Limited) to enable that debt to be repaid and that the bank’s debt and its securities would be assigned to Wavetower Limited (Schedule 19). The administrators’ legal advisers have asserted that the STA is illegal on the ground that it was an agreement for the giving indirectly by Rangers of financial assistance for the acquisition of its shares contrary to section 678 of the Companies Act 2006. The existence of this challenge is not however relevant to the directions which I have to give as I must assume at this stage that the Ticketus agreements are valid.

As I mentioned in my last post, this discloses (a) that Rangers lent, or it was proposed that it should lend, Group £16 million and (b) Duff & Phelps are trying to strike the Ticketus deal down on “financial assistance” grounds.

 

What Chance Do the Administrators Have of Striking Down the Ticketus Deal as Illegal “Financial Assistance”?

Slim.

OK – I’ll explain. My “workings” are shown below but, put simply, it looks as if, even if the loan from Rangers to Group was “financial assistance” the sale to Ticketus is a normal and legitimate business transaction. Whilst it might be argues that the sale is “tainted” by illegality in the loan deal, the two transactions can be separated.

However, even if the Ticketus “sale” is struck down, Ticketus would have a claim against Rangers for return of the money on the grounds of “unjustified enrichment”. Ticketus will either have a valid contract or will be creditors. They will not, to coin a phrase, be walking away!

Rangers’ Administrators Want to Rescue the Club with a Share Issue – Why It Won’t Work

On Friday Lord Hodge issued his decision in the application by D&P for “Directions” in connection with their handling of the Rangers administration.

Put very simply (and with due respect to the 63 paragraphs of the decision), he decided:-

A             that any rights Ticketus hold in Ibrox Stadium, the season tickets for the stadium and the proceeds of future tickets sakes are personal contractual rights. This means that Ticketus can only enforce their agreement against Rangers Football Club PLC, and they would have no rights against any other party who acquired Ibrox Stadium for use as a football ground during the currency of the Ticketus agreement, which ends after season 2014-2015.

An excellent analysis of that aspect of the decision can be found here, and I commend it to my readers.

B             that he was not wiling, standing the information he had been given, to make any order or give any guidance to D&P permitting them to break the Ticketus contract with impunity.

 

D&P, as stated to the court, see two ways of achieving the purposes of administration. As you may recall, the primary goal is to rescue the company as a “going concern” which failing to achieve for the generality of creditors a better result through administration that through insolvent liquidation.

Their two ways of doing so are as follows: a share issue and sale of the majority stake in the company; or a sale of the assets of the business. In either case this would be accompanied by a CVA.

I will look at both in more detail now, with reference to the Ticketus scenario. (For fans of large thrillers, doesn’t “The Ticketus Scenario” sound like a Robert Ludlum title? I digress.)

 

The Share Issue Option

The Rangers Debt Situation

Rangers Football Club PLC is in a dreadful financial mess. It presently owes at least £9 million to HMRC in connection with unpaid taxes accruing since May 2011, as stated by counsel for D&P in the Court of Session. That figure may be as high as £15 million.

Rangers owe the Debenture holders who contributed some years ago to ground improvements around £8-9 million, the Debentures becoming due and payable upon the company entering administration.

Rangers owe HMRC in relation to the “Big Tax Case”. Whilst the case awaits a decision from the Tax Tribunal, HMRC cannot enforce payment, but they will move to do so as soon as they have a judgment. The determinations under appeal by Rangers date back to February 2008. The appeal was commenced in 2009. HMRC will have lodged a claim with D&P for the full sum it is seeking, together with interest and penalties. This liability was described by Craig Whyte as possibly running to £75 million!