Rangers in crisis: the final whistle sounds on Rangers’ 140 years of history
The degradation of Rangers as an institution – which for many years regarded itself as part of the Scottish Establishment – will reach its nadir on Thursday when the only surviving proposal to bring the stricken club out of administration is formally abandoned and the process of liquidation begins.
11:00PM BST 12 Jun 2012
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The decision was forced by Her Majesty’s Revenue and Customs after a change of attitude by the taxman which spells the end of the continuity so prized by Rangers supporters, whose club was founded in 1872 and became a limited company in 1899.
As Telegraph Sport revealed soon after Rangers went into administration, HMRC sources indicated that a Company Voluntary Arrangement would not be opposed provided that there was an equitable settlement and a guarantee of no further involvement by Craig Whyte, whose use of PAYE and VAT deducted at source to pay for his cash flow tipped the club into insolvency.
There was also, Telegraph Sport understands, a degree of political pressure applied at Treasury level for HMRC not to push Rangers over the brink but when the proposals made by Charles Green – who is fronting a consortium whose members remain shadowy – were examined in detail it was felt that the payout to creditors was too low to be acceptable in a case where tax had been withheld to such an extent.
There was, in addition, the question of the club’s use of Employee Benefit Trusts which have been the subject of a tax tribunal – known as the big tax case – the decision of which has been awaited since January and which could amount to a liability of as much as £75 million.
The administrators were informed of HMRC’s decision at a lengthy meeting on Monday morning after which Green’s advisers were due to meet the tax authorities’ representatives. The second meeting was cancelled.
Paul Clark, of Rangers’ administrators, Duff & Phelps, said of HMRC’s action yesterday: “The quantification of the big tax case didn’t prevent a CVA being put forward and nor did that influence their decision.
“The fact is that because of the company’s previous delinquency on its tax payments and their general concerns over EBTs, they felt the monies being offered to them were simply not enough.”
An HMRC spokesman said: “A liquidation provides the best opportunity to protect taxpayers, by allowing the potential investigation and pursuit of possible claims against those responsible for the company’s financial affairs in recent years. A CVA would restrict the scope of such action.”
The HMRC decision caused consternation within the Scottish Premier League and the Scottish Football Association. Although liquidation of the existing Rangers business could take several weeks – and would be effected under the London-based company BDO, who have a reputation as tough negotiators – a ‘newco’ will emerge quickly.
“We assume that, regardless of what the other creditors’ views are, on Thursday, some time around late morning or lunchtime, the CVA will be rejected and we think the meeting will now be a very short one,” said Clark.
“What we’ll be seeking to do as soon as possible following that rejection is to finalise and formalise the sale of the business and assets, effectively picking up everything that is currently residing in Rangers plc and moving it to a new company which will then become the corporate shell for Rangers FC.
“The whole point is not to allow the football club to do anything other than exist. It’s just to change the name over the door if you will.”
If a ‘newco’ application is admitted for consideration by the SPL board when it meets on Monday it could be included in the league as early as July 2 if the board decides to call a general meeting of the member clubs within 14 days. Alternatively, the SPL could wait until the annual general meeting of July 16, but that would leave only 19 days until the start of the new season.
The SPL’s fixture list for next season will be published on Monday but last night it was being considered that Rangers’ name could be substituted with an X until the position is resolved. If the SPLs vote to admit a Rangers ‘newco’ – eight of the other 11 clubs must agree – then the newco can be considered for SFA membership.
On the other hand, Rangers Supporters Assembly vice-president, Ross Blyth, suggested that a fresh start in the third division of the Scottish Football League is favoured by some of his members. “The SFL clubs might welcome the chance to have Rangers,” said Blyth.
“They would negotiate pretty good sponsorship and TV deals with Rangers in that league.”
As for HMRC’s actions now, how far can and will they go to pursue remedy for their outstanding bills? Key words in the HMRC statement – that there could be “claims against those responsible for the company’s financial affairs in recent years” – raised more questions than the authority cared to answer yesterday.
Malcolm Cohen, who will be one of the liquidators appointed by BDO, recently said on the company’s website: “The time may be right for people and institutions who’ve lost money in the credit crunch to look towards recovering their losses – through litigation if appropriate.
“I am upbeat about the amount of contentious insolvency work that litigation departments are likely to see in the coming months, as creditors and other claimants look to boost their recoveries. But insolvency work requires rock-solid attention to detail, and the right choice of expert.
“Although this type of work may come into the firm through business restructuring, we would be crazy not to use our forensic team to go over the raw data, with a fine-tooth comb if necessary, before we decide what action to take on behalf of creditors. The forensic people would be an integral part of the team from the beginning.”
Since they have not yet been appointed officially, nobody from BDO was available for comment on Rangers last night but the first question that will be asked is how far their reach will extend.
HMRC’s reference to “recent years”, rather than specifically the nine months of Whyte’s control, suggests enquiries that will go back to the era of Sir David Murray’s ownership.
As for the playing squad, the administrators’ view is that all employees’ contracts would roll over automatically into a ‘newco’, an opinion that has been disputed by the PFA Scotland chief executive, Fraser Wishart.
At the final Old Firm game of the season last month, the Ibrox chorus of ‘We’re Rangers till we die’ was met with the Celtic support’s response of ‘You’re Rangers till July!’ Even that estimate turned out to be over-optimistic – and the final whistle has sounded on 140 years of history with Tuesday’s announcement.
King threatens Green
Rangers director Dave King reiterated his intention to challenge Charles Green for the takeover of the club.
King claims discredited owner Craig Whyte previously promised him first refusal on his 85 per cent shareholding and has vowed to take his challenge to court.
The South African-based businessman, who claimed liquidation was “inevitable” in March, told BBC Scotland: “There is, in my view, no possibility that Green (as nominee for whoever) will ever own the club.”
A former director, Paul Murray, whose Blue Knights consortium failed in a bid to buy the club, added: “Obviously it’s a very sad day for the club. But one of the very few good things that might come from this is that BDO as liquidators have significant powers of investigation.”
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