Rangers go into administration

[Caley]

A new company (Rangers Football Club of Glasgow Ltd) was set up on 20th February...I've not delved any deeper than that, but it would appear this would be one of the proposed NewCo's.

Anyone who isn't already disqualified, has £14, and the ability to fill out a few forms can incorporate a company. They can call it whatever they like as long as it isn't too similar to other company names and it doesn't contain a few certain sensitive keywords.

I could register "Govan Football Club Limited" next week with Companies House as a private limited company should I choose to do so. Means feck all in reality.

Edited April 7, 2012 by Caley

[CaleyD]

Wow...in all my years working in financial services and business analysis, I never knew that!!!

As I said, I never delved any deeper. However, given that the name IS very similar to others...including the clubs current registered name and associated trademarks etc...then it's more than likely they would have needed permission to register it. Even more so when you look through the proposed names and see others which are similar (such as Rangers (2012) Ltd).

Nothing sinister in any of that....it makes sense for anyone preparing a bid to be prepared, even if the first choice is not the liquidation route.

[Caley]

Wow...in all my years working in financial services and business analysis, I never knew that!!!

Was it really necessary to take the p1ss out of me?

The point I was making was that anyone could have registered that name. Could have been a Celtic fan on a wind up or a journalist making up a story.

[Gabby]

The bidders for Rangers will liquidate to sell the assets to a newco operated by themselves. The proceeds of the sale will be divided amongst the creditors. This means they can play out of Ibrox etc and be debt free.

What this means is Rangers FC will no longer exist, and a new club will rise out of the ashes. This is why the name Govan FC keeps getting used.

But how much will they sell the assets to newco for? £1 seems to be a popular figure these days. It certainly ain't going to be £134 million or anywhere close. The liabilities stay with the old company so the creditors get eff all.

So, this is my understanding. There are 2 choices:

1. Get 75% (by value) of creditors to agree to a Company Voluntary Arrangement or Scheme of Arrangement. e.g. for every pound owed you will get 30p and Rangers plc carry on trading
   
2. Liquidate the old company and form a new one. The old company sells the assets like Ibrox Stadium and Murray Park to the new company for a nominal fee like £1. The debts stay with the old company so the creditors get nothing.
   

Now I see why people are screaming for sanctions against a newco if they were to enter the SPL.

Catch on quick don't I?

The sale of Rangers to Whyte wasn't 1 pound. The actual sale amount was all the bank debt plus 1 pound. The confusion comes from the fact that he only used 1 pound of his own cash.

Any new bidder will not be able to buy Rangers for 1 pound. For example the bidders would have had property consultants analyse the value of Ibrox, the Murray Centre so they can make an informed bid.

It is also worthwhile noting that there is no relationship between Rangers and Newco. This is because Rangers would be liquidated before Newco would exist. In saying that there would be no legal issue (that I know of) that would stop Newco calling the club Govan Rangers

Maybe you didn't notice I used the term "nominal fee" in relation to £1?

Quite correct that Rangers plc and NewCo plc would be separate legal entities. Surely they can both exist in the same time frame though...no need for one to die before the other is born.

Fair call.

they can exist at the same time, I suppose I meant that they are trying for a smooth transition from Rangers in SPL to Newco in SPL

[Laurence]

The trophies Rangers have won are now blighted, by the fact they were won with other peoples money.

So Rangers having wrecked history and ruined the stats of Scottish football with what in blunt terms is cheating can get away Scot free, because all the other clubs need revenue.

Any one of us could win the league if we could manage a team with over hundered million spare pounds to spend. I am sure Terry and ICT could.

[Laurence]

Regarding the New Com[any name

Just pop the date after the old name

as in Accrington Stanley 1968

Which I believe is their trading name, but thjeir playing name is still Accrington Stanley

So Rangers will be registered as Rangers 2012, I have a feeling they are Glasgow Tangers on the official lists, but still who cares

Edited April 7, 2012 by Laurence

[Tichy_Blacks_Back]

The trophies Rangers have won are now blighted, by the fact they were won with other peoples money.

So Rangers having wrecked history and ruined the stats of Scottish football with what in blunt terms is cheating can get away Scot free, because all the other clubs need revenue.

Any one of us could win the league if we could manage a team with over hundered million spare pounds to spend. I am sure Terry and ICT could.

Not sure how you can say this as I am sure pre-1960s (even up to the early 1980s) the tools to borrow money and raise capital to the levels of today was not available to football clubs (and more importantly their owners).

Interesting point though - what about all the other SPL clubs that have currently run up large debts (Aberdeen (approx 12M), Celtic (approx 10M), Hearts (approx 30M), Hibs (approx 6M) in the SPL, and then there was Dundee, Livingston and Gretna) who are/were effectively fielding teams with other people's money as you have pointed out - should their records be cast in doubt also? - have they also assisted in the wrecking of the scottish game?

Based on your criteria the answer is probably 'yes' and also makes you think what would happen to Hibs 'grand plan' if they were relegated this season.

[Alex MacLeod]

That whole arguement could also be transfered to English football. How many clubs down south have won trophies whilst being vastly overdrawn? Its not the amount of debt Rangers were in that became their downfall. Its the ability to maintain that debt. Had David Murray not come in when he did Rangers would have been in this position years ago. As would Celtic had it not been for McCann. The other clubs who found themselves in serious trouble like Killie, Motherwell, Hibs, Aberdeen and Dundee U, and even us to a lesser extent, were able to claw their way out of it by realising that they had to get back to making things simple and building from scratch again.

Laurence, are the trophies won by Man utd the proceed's of cheating? They reported debt of £408 million last year. Which, incidently, was a drop from the year before. Arsenal have admitted they wont be spending vast amounts on players until they have cleared their stadium debt. A debt they had when they were winning things. Newcastle and Liverpool are both where they are because of budget cuts to pay off debt. Are all those teams cheats? If you want to cast the stone at Rangers then cast it at all the others at the same time.

[+DoofersDad]

I confess to being largely ignorant of the murky world of business finance but would agree up to a point. Borrowing money is a fact of life and we all do it. A mortgage for instance allows us to live in a house that we could not afford were we not to borrow money from someone else. As long as the business pays back the loan and the interest associated with it then there should be no problem. If one business is better at persuading others to loan them money and is more successful as a result, then good luck to them. That is simply good business.

It gets murky when the business is less than honest with those lending the money. If those loaning the money are given incorrect information about the business which hides the level of risk then the business obtains money which it might not otherwise have got. Those loaning money have a responsibility to check the business model they are presented with and therefore it can become a grey area as to whether the lender has just been naiive or whether the business has acted fraudulently. I couldn't possibly say which is the case here other than Rangers are certainly in the murky area of business.

And where I would certainly take issue with Alex and would go along with Lawrence is that most of Rangers' debt is not their failure to pay back loans, it is failure to pay taxes which they are legally obliged to pay and failure to pay a variety of other businesses money which is simply owed for services provided. There is therefore a world of difference between being in debt and not paying what you owe to others. Other football clubs may be in debt (and some by considerably more than Rangers) but if their business model offers assurances that money owed can always be paid then we should not be unduly concerned.

The point here is that the powers that be should expect any football club to act within the law and to pay money owed to others with reasonable promptness. Failure to do that should result in sanctions. It is right to throw the book at Rangers but it would be wrong to throw the book at any other club just because they have what appear to be rather large debts.

Finally, just a thought about a specific debt Rangers apparently have failed to pay. Reports suggest an unpaid bill of £8,000 to the Scottish Ambulance Service. Given what happened recently with Fabrice Muamba and the fantastic attention he received at the scene of his collapse, it seems quite appalling that Rangers have failed to pay them promptly. If anyone at Rangers had a shred of decency about them, they would have paid this small but important debt out of their own pocket.

[Alex MacLeod]

I would not for one minute defend Rangers for their tax dodging antics. There is, however, a lot of talk about them not paying small amounts. Those amounts being talked about are payments that were due at the date of administration. ICT were one of those due money and have been paid. We dont actually know who else has or hasn't been paid so can we really comment on what we dont know. Many business's will have credit arrangements in place. It may be the deal is to pay monthly, quarterly or whatever. The administrators published a list of those who were owed money at the date they took over. At no time in the report do they say that any of the small creditors have not since been paid.

[SMEE]

That whole arguement could also be transfered to English football. How many clubs down south have won trophies whilst being vastly overdrawn?

Being overdrawn is one thing, Tax avoidance is quite another. There's no law against being overdrawn! I'm pretty sure not many of the clubs you mention were tax dodging in their pursuit of success

[SMEE]

Apparently....Rangers still owe Hearts about £500k for a player, and the money is due in July. As chic young says, if he got a car via a credit agreement, and didnt keep up the payemnts, the car would be reclaimed. I wonder if the same is true with football players?

[CaleyD]

Depends on whether the loan was secured on the car. If it was a personal loan/credit agreement then the car could not be repossessed.

The interesting thing about "footballing debt" in Scotland is that once in administration it does not cover future debts...essentially any payments due to be made to another club in the future such as instalments on players purchased.

It's likely that Hearts will find themselves lumped in with all other creditors and be offered Xp in the £. Rangers have been in danger of administration for almost a year now, so anyone who offered them credit to any great extent during that time did so knowing of the risks. In fact, anyone who doesn't insist on C.O.D. or money up front when dealing with a football club in this day and age does so with the added risk that they may never see all of what they are due.

[Gabby]

Had to laugh, 2 of the bidders involve a bloke called Bill. Rangers are in this position because they ignored Bills.

[bauhaus]

Every one has know Rangers have been in serious debt for a good number of years. Over the past 4 years they had managed to get this debt down a huge amount, to what was reportedly around £18m. During this time they had been paying their PAYE and VAT and tax. The Big tax case was something seperate that Rangers have found themselves battling after administrative/technical errors which the HMRC have closed the door on.

Enter Mr Whyte, pays £1 for club, borrows £x million ( £27m i think ) and uses that to pay off bank debt, and then doesnt pay the tax, vat and paye. Excluding this BIG TAX case, Rangers should not be in this position. Having cleared the bank debt, even with borrowed Ticketus money, they should have paid everything else easily enough. The fact that he did noy pay anything to the tax men since he took over shows the mans intentions.

I think that Craig Whyte should be the man who owes Ticketus the £27m, not Rangers. He must be a total con man.

It also makes me think why are Aberdeen looking to build a new stadium when they are already in so much debt, as this will increase the burden at a time when money is such a big concern for the future. I fear that the debts the Dons are taking on will do the same thing to them.

Anyone remember the level of debt Celtic were in when McCann came in and saved them, as I seem to recall they were days from administration back then too. Difference between Rangers and Celtic now, is Celtic got McCann when they needed him, Rangers got Whyte when they didnt!

[Alex MacLeod]

Aberdeen are not adding to any debt by building a new stadium. Their new stadium, alongside Coves new stadium, will be paid for from the proceeds of the many new flats, houses and penthouse suites that are to be built at Pitoddrie and Cove.

[CaleyD]

The cracks were showing in Rangers ability to survive day to day with the finances before Whyte came anywhere near the place. They were already being all but run by the bank because of fears that they could not service the £18 Million Debt and various people were seeking to have funds frozen to protect them for fear the company was heading in to administration if a buyer could not be found (or indeed even if they did find one).

They (Rangers) also already had a deal in place with Ticketus previously, so Whyte doing this deal with them was nothing new. Payments were due on old agreements there, Rangers already tight cashflow situation was damaged by funds being frozen and whilst I do not argue for one second that Whyte knew exactly what he was going to do when he came in, I don't believe that Murray was unaware and "duped" as he claims to have been. Rangers was heading for administration, it was simply a matter of Murray finding someone willing to take the wheel so as he could distance himself from the crash....someone who didn't give two hoots about tarnishing their own name so long as they could make a pound or two from it themselves.

Maybe Whyte was the one who was, to some extent, "duped". Losing the BGT was always going to send the company to administration and I think that is what Whyte had been planning for when he took over. Even if his promised investment had gone in to the company it would not have stopped them being where they are today, in fact if he realised early on that throwing money at it would make no difference then it makes a certain amount of business sense not to throw good money after bad. Better to hold on to it and use it to get the company through administration and invest beyond that....an option which has all but been removed from the equation due to the earlier than expected and far more dramatic downfall experienced by Rangers.

[Gabby]

Good post CD. I'm not sure anyone was duped though. DM wanted to run away as fast as possible and CW just wanted to make a quick buck.

[Tichy_Blacks_Back]

Below is a BBC article before the Rangers implosion that was reporting a net debt of 109M for the SPL clubs (even though Neil Doncaster tried to put a positive spin on it) that really puts the Rangers number into perspective....

“Clearly the doomsday scenario is that the clubs just cannot survive and some may go under.”

David Glenn Pricewaterhouse Coopers (August 2011)

Scottish Premier League clubs face going bust if the fans continue to stay away, according to a top football finance analyst.

Attendance figures show that almost 600,000 fans have stopped attending SPL games in the past five years.

David Glenn, from accountancy firm Pricewaterhouse Coopers, told BBC Scotland many clubs will not survive.

However, the 2011 annual report on Scottish football finances shows clubs overall making a small profit.

The latest report appears to show that clubs have heeded grim warnings from the past with regards to debt.

The 12 SPL clubs combined posted their fifth bottom-line profit in the past six years - this time with a headline profit of around £1m.

But Glenn is concerned with where clubs go now.

"Each club gets around £1m a year from the broadcasting deal, therefore the majority of the income for Scottish clubs is actually coming from fans coming through the turnstiles," said Glenn.

"Clearly the doomsday scenario is that the clubs just cannot survive and some may go under.

"It is all about clubs continuing to cut their cloth accordingly and they are probably going to have to be selling clubs just to balance the books.

That is not a good message for fans who will be wondering about club ambition.

"My message to the fans though would be - if you want your club to survive, you are going to have to accept that they have to reduce the wage bill and sell their best players when they become of worth," said Glenn.

The SPL remain bullish, despite the grim forecasts.

The league's chief executive Neil Doncaster says Scottish football is posting positive results in a very tough market.

"We are in the middle of a world economic downturn. That is the reality," he told BBC Scotland.

"It is hitting supporters in the pocket but our clubs are responding to that with competitive pricing packages.

"The facts are that this report shows our clubs making a profit for the season before last.

"That is incredibly positive."

Champions Rangers were boosted by reaching the group stages of the Champions League and were the most profitable club in season 2009/2010, posting a gain of £4.2m.

Rivals Celtic recorded the largest loss at £2.1m.

Net debt grew marginally to £109m - with only Hamilton and St Johnstone operating debt-free; half of the clubs recorded a rise in their debt.

However, those figures don't tell the whole story.

"The headlines look relatively attractive," said Glenn.

"But if you dig a little deeper into those numbers, Hearts and Kilmarnock had debts written off totalling around £8m.

"So actually there is an underlying loss there of about £7m."

Edited April 10, 2012 by Tichy_Blacks_Back

[SMEE]

"It is hitting supporters in the pocket but our clubs are responding to that with competitive pricing packages.

Oh No they arent!!....football offers very poor value for money, for what is 90 Mins entertainment. I could take a family of 4 Ice skating for 150 mins, and buy them all a drink for the same price as a cheap adult seat at an ICT game

[Libero]

Of all the sports i have spectated at in recent times, and there have been quite a few, I have to say that football is without a shadow of a doubt the least value for money of all of them. I can count on one hand how many times ive been to football games in the last 5 years or so and felt that i got value for money, incidentlally none of those times have been in Scotland!

[CaleyD]

The great thing about the whole Rangers mess is that you just know there's always more to come.....

Andrew Ellis to take legal action over claim to 24.9% of shares - http://www.bbc.co.uk/sport/0/football/17667092

[ICTRoughi]

The great thing about the whole Rangers mess is that you just know there's always more to come.....

Andrew Ellis to take legal action over claim to 24.9% of shares - http://www.bbc.co.uk...otball/17667092

I seen it posted elsewhere that Craig Whyte has moved his floating charge from Rangers Football Group to Liberty Capital. What does that mean ? Along with Ellis' claims surely it will create a legal minefield..

[CaleyD]

Yeah, saw that in the Daily Record this morning.

Rather than trying to explain it, you'd be best checking out the description of what a Floating Charge is at this link - http://www.companylawclub.co.uk/topics/fixed_and_floating_charges.shtml

Whyte has effectively moved control of that floating charge from one company to another.

The person who holds the Floating Charge effectively has the power to borrow against the assets of the company....and/or has a claim on the proceeds of those assets as a preferred creditor should the company be liquidated.

Yeah....another potential legal minefield that could drag the whole saga on for a much, much longer.

[Sorted]

Another move to squeeze the last of the liquid (ation) from this prehistoric monster. It'll all be over soon enough........