Rangers administration: Liquidation could turn the heat up on Whyte
Doomsday scenario would see owner investigated but CVA is preferred option
Rangers supporters have a quandary to consider. Do they wish to see Craig Whyte, the owner who pushed the club into administration, brought to book for his actions since purchasing Rangers in May? Or do they want to simply see their club delivered from administration into the hands of new owners, via the cleanest form of exit strategy – a Company Voluntary Arrangement?
A CVA is very much the process of choice, insisted David Whitehouse, of Duff and Phelps, yesterday, ahead of today’s deadline for best and final bids. But liquidation is an all-too-real prospect as well.
Whitehouse aimed to point out that what sounds a dire conclusion to a depressing chapter in the club’s history might also be supplied with a small consolation. Liquidation would clearly be a bitter, bitter pill for the Rangers supporters to take. How much it is sweetened by the news that Whyte would then be placed under investigation depends on how much Rangers fans wish to dwell on the recent, traumatic past. Liquidation could also see a world record haul of 54 titles fade into history, consigned to the achievements of another club, in another time. That might not be so attractive, no matter how much Whyte has emerged as the bogeyman since it was discovered he had failed to pay over £9 million of PAYE and VAT taxes following his takeover in May.
Whitehouse is keen to point out that are other routes out, which are a hybrid of both a CVA and liquidation. “You can potentially exit through a CVA and then hive-down to a newco post CVA on a solvent basis, which would be a lot easier sell to the SFA and Uefa,” he explained yesterday to The Scotsman.
Whitehouse stressed there are different forms of liquidation. “What is important to stress is what liquidation means,” he said. “There are a number of options which could be developed.” There is one common theme. Liquidation would see Whyte, and other Rangers directors, become the subject of a report compiled by the liquidator, who must investigate their conduct on behalf of the courts. How Rangers got into this situation should not be forgotten amid the desperation to emerge from it. “Another issue of liquidation which you need to be mindful of is that liquidation does provide the broadest powers of investigation in relation to conduct of previous directors,” said Whitehouse. “There is an economic argument in terms of retained value through a CVA but there is also an economic argument in relation to possible value through liquidation, albeit that is contingent.
“One of the options being looked at is running some parallel proceedings, akin to what happened at Portsmouth, where you have a CVA with a liquidation at a later date following a hive-down.
“I don’t think what anyone wants is a whitewash in relation to what has happened in the past. It is a combination of enhancing the interests of the various stake holders and there is a lot of emotive talk about it being catastrophic for the business in relation to liquidation. I think that is viewing liquidation out of context in terms of it what it actually means. It is emotive – the hierarchical purpose of administration is the survival of the business. Our purpose is a CVA but it has to be deliverable. The economics have to stack up.”
The onus is on the bidders to make the financial details of their proposals work. Blue Knights, headed by former Rangers director Paul Murray, American investors Club 9 Sports and a Singapore-based group are all expected to make formal bids. Brian Kennedy, the Sale Sharks owner, could also make another bid today - he was still weighing up his options yesterday.
A preferred bidder will then be chosen, probably tomorrow. “Immediately after Easter we would hope to be in a position to make some proper announcements in terms of exit strategies,” said Whitehouse. The future of Rangers could well hinge on Ticketus, the investment company. Deals agreed between owner Craig Whyte and Ticketus over the sale of future season tickets were worth £30.5 million in total, with £27 million still owed on them. Reports yesterday claimed that the London-based firm are willing to accept just £10 million back, after an agreement struck with Paul Murray. However, Whitehouse revealed that Ticketus are not only interested in a tie-up with Murray.
“What has been put to us is that Ticketus want to take a pragmatic approach and support a purchaser moving forward in terms of funding and in terms of their position as a creditor,” he said. “They would not participate in the creditor pool in the event that a CVA paid a dividend to creditors. By diluting the creditor pool they increase the value of the bid. We have encouraged that process. Ticketus have not only spoken to Paul Murray but other interested parties too.
“Clearly, if they roll in with a purchaser then they will want to see some return - whether it is £10 million or £27 million. They are aligned to Paul Murray, but they asked that they be able to present themselves to all interested parties as a solution.”
HMRC also remain very much in the loop. Unpaid tax is still the cloud casting the greatest shadow over Ibrox. “They want to see the right thing happen by the club but at the same time they want to maximise their return,” said Whitehouse. “Financially they need to ensure they get the appropriate outcome for the British taxpayer.”
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