Rangers administration: creditors set to lose 90% of their cash

Proposal documents for a Company Voluntary Arrangement (CVA) meeting, which will take place at Ibrox Stadium on 14 June, were formally issued to creditors and shareholders yesterday. If successful, Rangers will exit administration on 12 July.

A total of about £55 million is owed to unsecured creditors. The 60-page CVA document does not specify a pence-in-the-pound figure, but it is understood creditors will be offered between 8p and 9p in the pound.

Prospects of the CVA being accepted effectively lie with investment firm Ticketus, owed £26.7m from the season ticket deal struck with businessman Craig Whyte ahead of his takeover of the club last year, and Her Majesty’s Revenue & Customs (HMRC), which is owed £21.5m.

If it accepts the deal, Ticketus would get back only about £2.5m and HMRC around £2m.

Duff & Phelps, as secured creditors, are in line to receive full payment of the £5.5m in charges they have racked up since being appointed as administrators of Rangers on 14 February.

For the CVA to succeed, it will require 75 per cent approval in value of creditors or 50 per cent in value of the members voting on the offer.

The full list of Rangers creditors

Charles Green – the Yorkshire businessman leading the Sevco consortium which has signed a binding contract with Duff & Phelps to purchase Rangers for £8.5m through a successful CVA – said: “Today is an extremely important milestone for Rangers to begin the journey back to where the club belongs, as a leading sporting institution that can hold its head high.

“I have great sympathy with creditors, particularly small local businesses around Ibrox, who have suffered in the lead-up to administration.

“However, I fervently hope that creditors will form the view that the best interests of everyone will be served by Rangers continuing as the successful club it is and recovering as a business.

“The consortium I am leading can only do so much to heal the wounds of the past, but we can do something about the future and that is where our main focus must lie. I hope creditors will approve this proposal and we can begin the task of rebuilding Rangers in earnest.”

If the CVA fails, Mr Green’s consortium has committed to paying £5.5m for Rangers’ assets and forming a newly constituted club, or “Newco”.

That option is conditional on both the Scottish Premier League and Scottish Football Association guaranteeing a continuing place for the reformed Ibrox club in the top flight of Scottish football.

Paul Clark of Duff & Phelps is optimistic the CVA can be achieved to rescue Rangers from what he described as a “catastrophic” period in their 140-year history. He said: “This proposal offers the best return for all stakeholders given the position the club is in.

“If approved by the creditors, the CVA will rescue the club and finally enable the company to exit administration.

“Since our appointment, it has been our principal objective to propose a CVA, which is the preferred solution to what has been a catastrophic period for the club.

“That view is shared by everyone with Rangers’ interests, and those of Scottish football, at heart.

“We should remember there are many stakeholders who have suffered financial losses as a result of Rangers being placed into administration. Regrettably, there is no solution available that allows these parties to recover their losses in full.

“However, after a very intensive bidding process for the club we can now say that the offer being put forward as part of the CVA is the best solution available to creditors and we hope they will approve the proposal.

“Having issued the proposal, it is now a matter for the creditors to consider what is on offer and it is their decision entirely as to whether the terms of the CVA are acceptable.”

In a statement, Duff & Phelps confirmed the exact amount creditors can expect to receive will not be known for months.

It read: “The administrators intend to make a distribution to creditors as soon as they can should the CVA proposal be approved.

“The overall costs of the administration process will be deducted from the funds available.

“All costs and charges incurred in the administration and the CVA are proper expenses at levels which are in keeping with best practice guidelines set by insolvency practitioners’ regulatory bodies.

“All of the administrators’ own costs are subject to approval by creditors.

“The final amount available to creditors could be in excess of £25m. The precise amount will not be known for some months.

“At this stage, there are two outstanding issues that will have an affect on the quantum of funds which can be distributed to creditors.

“The first is litigation brought by the administrators against the former lawyers for Rangers, Collyer Bristow. Should that be successful, further funds will be made available to creditors.

“The second is the outcome of the HMRC first tier tax tribunal. Should the tribunal find against Rangers that will increase the quantum of HMRC’s claim on funds available to creditors.”

The CVA proposal is being sent to about 400 trade creditors, more than 6,000 fans holding debentures and all of the club’s shareholders. If the plan is approved at the June meeting, there will be a 28-day cooling-off period before Rangers could come out of administration.

If no CVA is agreed, Mr Green plans to push through a Newco purchase of the assets.