Rangers Myths – Number 326 – “It’s Not Gratuitous Alienation If Assets Sold By Insolvency Practitioner” – Wrong!

Regular readers will know that I believe there is a very strong case to say that the sale of assets of Rangers Football Club to Sevco (insert precise Sevco entity here) in June 2012 was not for full value.

That is NOT to say that anything illegal, criminal or underhand happened. Rather Mr Green managed to secure assets worth many millions of pounds for only £5.5 million. Despite his fall from grace, he is still up for Businessman of the Year, at least in my eyes!

It is my view that, subject of course to the detailed investigations carried out by the liquidators BDO, there is a strong case for asking the purchaser of the assets to prove that an adequate consideration was paid. As readers who can recall my previous posts on this topic will know, it is not for the liquidator to show that the price was too low, but for the buyer to show it was adequate. In addition, it is not necessarily the case that the best price received after a marketing process would be “adequate” in all the circumstances.

Mr Whyte, Mr Green, Sevco 5088, Sevco Scotland and Prospectus Risk Factors

In which I comment on:-

• the return to the fray of Craig Whyte,
• the confusing issue of whether Sevco Scotland Ltd (which was not a party to the sale agreement) or Sevco 5088 Ltd (which was) acquired the assets directly from Duff and Phelps,
• whether Mr Whyte’s challenge ought to have been mentioned as a “risk factor” in the Prospectus,
• whether Mr Whyte’s allegations might provoke BDO into further and more immediate action and
• whether his involvement, if established, bolsters or weakens any case of alleged “gratuitous alienation”.

Gratuitous Alienation and RFC 2012 PLC – Some Clarification for Clarkeng

In response to my post re Gratuitous Alienation earlier this week, I noticed that Clarkeng made a few comments disagreeing with my thesis. I think that there may be crossed wires on our parts so I thought I would clarify my argument.

Some of Clarkeng’s comments are indented below, with my responses in bold beneath.

As far as BDO challenging D&P about the value achieved for the sale of the business and the assets I do not think you will hear anything further despite Paul’s suggestion.

To be exact BDO would NOT be challenging Duff & Phelps. Instead they would be “challenging” the purchaser, Sevco Scotland Ltd (now Rangers Football Club Ltd). An administrator acts as an agent for a company in administration, and the actions of the administrator are the actions, legally, of the company.

This is unlike liquidation where the actions are those of the liquidator, as the company is in no state to take any action itself.

As for time scales, if there is to be action by BDO regarding an apparent gratuitous alienation, then I would not expect it until near the end of this year, at the earliest. Liquidations take time, especially where there are as many complications as seem to exist in the case of RFC 2012 PLC.

Rangers Interim Results – Everyone at Ibrox is Very Happy – What About Asset Revaluation?

A brief note (yes – it will be brief).

Rangers International Football Club PLC’s interim results are out and can be read in full here.

People will pore over them but is seems clear that all is well on the Good Ship Rangers, and that Captain Green, Commodore Murray and First Mate Stockbridge are steering a course as plotted in its business plan and flotation document.

There is one squall on the horizon that I want to mention at this point.

As with weather approaching a vessel on the high seas, it might change course, missing the boat. It might blow itself out before reaching it. It might even turn out to be a smudge on the lookout’s telescope, and not there at all.

Why Rangers Share Issue Might Be Useful For an Alienation Rainy Day

In between lots of real life stuff, there has been little chance to look at the Rangers Prospectus in some detail. I did look to see whether the issue of “gratuitous alienation” might be raised as a risk factor. It does appear to be covered, although obliquely.

I have seen frequent comments asking on what Rangers are going to spend the money which will be raised in the undoubtedly successful share issue, and why they are looking for the money now. To be fair all these are laid out in detail within the Prospectus, and that is where the answers are to be found. However, looking at contingencies, it is always possible that the funds, even though earmarked for one purpose, can be used for another where circumstances justify it. I am NOT suggesting that the Prospectus in any way misrepresents what the cash raised is for. However, if you have some money put away as a deposit for a holiday, but your car breaks down and needs expensive repairs done, it is entirely legitimate to use the reserve for that, and to replenish the funds later.

Against that back cloth I can see how it might be very advantageous to Rangers to have the share issue taking place now, and as successfully as appears to be the case.