Rangers administration: questions as club move toward creditor meetings

AFTER 105 days in control of Rangers’ affairs, administrators Duff and Phelps finally issued the Company Voluntary Arrangement proposal they insist can still prevent Scotland’s most successful football club from slipping into the ignominy of liquidation.

As the details of the 60-page CVA document began to be digested ahead of the creditors meeting at Ibrox on 14 June which will vote on the proposals, co-administrator Paul Clark of Duff and Phelps fielded a series of questions from daily newspapers last night.

Clark addressed the absence of a specific “pence-in-the-pound” offer in the document, the substance of former Sheffield United chief executive Charles Green’s proposed £8.5 million purchase of the club and the remaining influence on the recovery process at Rangers of outgoing owner Craig Whyte.

Q: How can creditors vote at the meeting when they don’t know how many pence in the pound they will receive?

Clark: They can, they don’t have to know. You show me the rule where they have to know. What I’m saying is that, although there can be a certain level of distribution, you can also have a situation where you’ve just got a certain level of assets, which is what we’ve got here, albeit it’s not a known level. But we know the assets will go into the pot. Quite unusually, because of the big tax case, we don’t know the final value of creditors. So we are dealing with something where we don’t know what the final distribution will be. What we do know is that it will be a better solution than any other outcome.

Q: Have you experienced this situation in the past as administrators?

Clark: Yes, it’s very rare that they know a strict number of pence in the pound. So this is not unusual at all.

Q: Is the £8.5m from Charles Green’s Sevco consortium a loan rather than an investment?

Clark: At this moment in time, it could be interpreted that way.

Q: Has the consortium deposited the £2.7m specified in their proposal?

Clark: We have never confirmed what has been paid or said publicly what the terms were. We have agreed terms with Charles Green. He has deposited the money, more than the initial deposit, and there is further money being deposited over the next two weeks. That’s really all I would say.

Q: When does the £8.5m have to be delivered?

Clark: He has to deliver £7.5m before the CVA meeting on 14 June. He has to deliver a further £1m within 30 days of the CVA meeting approving the proposal.

Q: Is there money in the bank to fund the running costs of the club from this Friday, when players’ contracts revert to their original salary terms?

Clark: Yes, we have received sufficient funds. We are moving forward knowing that we now have the funding for moving forward.

Q: Are the 6,050 debenture holders at Ibrox Stadium now effectively out of the creditors’ pot?

Clark: It is for the debenture holders to decide. If they choose to make themselves creditors, they can do so and lose the rights of the debenture. If they retain the debenture, as we expect them to, they retain the rights. We can’t force them to make that decision. But we assume the vast majority will not choose to become creditors.”

Q: Is any of the money being put in by Charles Green’s consortium refundable if either the CVA or “Newco” route fails?

Clark: Potentially, yes, because the CVA is £8.5m and the Newco price is £5.5m. If the remaining £3m is not used for funding, it could be refunded.

Q: If you have to go down the Newco route, is the £5.5m deal Charles Green has in that event exclusive, or can others enter the bidding at that point?

Clark: I think we’ve been through a sufficiently extensive bidding process and, because we were running out of funding, we didn’t feel we could have an option of going back out to the market. Green’s bid was better than all other offers on both CVA and Newco basis. So we’ve structured it so that the CVA is the preferred option. We hope that is concluded on 14 June but, if that doesn’t happen, Green has to force us – and we have to force him – to go the Newco route for £5.5 million. But it is envisaged that the CVA will be successful. If it’s not, there is no option for anyone else to come back in.

Q: Will players have to be sold when the transfer window re-opens in order to fund the CVA?

Clark: No, it is not envisaged that players will have to be sold.

Q: Will Craig Whyte receive anything above the £2 which Charles Green says he has already paid him?

Clark: Not to my knowledge of belief. I don’t believe Craig Whyte gets anything or there is anything going in his direction. We have always said that we don’t believe his shares have any value.

Q: The Rangers FC Group, set up by Whyte when he purchased the club from Sir David Murray in May 2011, is still a secured creditor according to the proposal document. Does that mean Craig Whyte has not released his floating charge over Ibrox Stadium?

Clark: Our view is that the assignation of the old Bank of Scotland floating charge was valid. But we do not believe the group has had any value. The debenture is valid but for nil consideration. So there is no mechanism for money to be paid. Bank of Scotland was owed some £18m. Had it still been a secured creditor, it would have been able to claim ahead of creditors. Although the debenture remains valid, because there is no debt attached to it, there is no mechanism to receive a payment. So there is no money due.

Q: Does Charles Green have Craig Whyte’s shares?

Clark: We are really into legalistic arguments here. These are open market issues which I can’t really comment on, even though Rangers shares are currently suspended.

Q: How is the administration trading shortfall of £3.6m accounted for?

Clark: It’s fairly simple. Obviously, the vast majority of income comes from season tickets sold in the first part of the season. That shortfall arises from the costs of running Murray Park and Ibrox, the players and the like.

Q: In disputing the 12-month transfer embargo imposed on Rangers, did you ask the SFA if you could take the case to the Court of Arbitration for Sport in Switzerland, rather than to the civil courts in Scotland?

Clark: I know that discussions took place between our solicitors and the SFA. I don’t know