Judge Lord Hodge States The Reality

[chilledbear 16]

I guess we all knew, but reading this brings a tear to the eye.

 

http://www.bbc.co.uk/news/uk-scotland-glasgow-west-15041278

 

A judge who froze £480,000 of Rangers assets has said the club's new owner recognises it could go under if it loses a disputed £49m tax claim.

 

The detail emerged in a published opinion from judge Lord Hodge, who is hearing former chief executive Martin Bain's case for unfair dismissal.

 

The judge said the takeover deal for Rangers had been structured to protect the new owner if the tax case was lost.

 

He said this was "an appreciation...of a risk of insolvency".

 

Mr Bain is pursuing a £1.3m damages claim against Rangers at the Court of Session in Edinburgh.

 

He raised the claim alleging breach of contract following the takeover at Rangers FC by venture capitalist Craig Whyte from former owner Sir David Murray.

 

'Not persuaded'

 

On 13 September, Lord Hodge granted a warrant to ring-fence £480,000 of the Ibrox club's assets, pending the outcome of Mr Bain's case, after deciding there was "real and substantial risk of insolvency".

 

 

Martin Bain is suing Rangers for unfair dismissal This centred on the, as yet undecided, outcome of a disputed tax claim from Her Majesty's Revenue and Customs, which totals £49m in tax and penalties.

 

In his written opinion, Lord Hodge stated: "I am not persuaded on the material placed before me that Rangers is presently insolvent on either of the tests of practical insolvency or absolute insolvency."

 

The judge, however, said he did believe there was a genuine threat to the club from the tax case and believed the new owner fully recognised this threat.

 

Lord Hodge referred to a circular sent to shareholders of Rangers on 3 June 2011.

 

He stated that this document "disclosed that The Rangers FC Group Limited (formerly Wavetower Limited) had purchased 85.3% of the shares of Rangers for the cash sum of £1 and had given certain undertakings".

 

Continue reading the main story

â??

Start Quote

I would have expected the chief executive of a public company to be aware whether or not his employment contract had the needed shareholder approval�

End Quote

Lord Hodge

 

Judge

Lord Hodge said The Rangers FC Group Limited had taken over Rangers' £18m indebtedness to the Lloyds Banking Group, "and obtained an assignation of the bank's securities over Rangers' assets".

 

According to the circular, this debt would be waived if Rangers had "not suffered an insolvency event within 90 days of the club's appeal in relation to the tax claim".

 

The judge noted that until the case was settled, and the debt was waived, all investment in Rangers by The Rangers FC Group Limited would be treated as increasing the club's debt to it.

 

Lord Hodge concluded that "this carefully structured deal" through which The Rangers FC Group Limited has secured a charge over Rangers assets and made the waiving of the club's debt conditional on a positive outcome to the tax case, "shows an appreciation by The Rangers FC Group of a risk of insolvency resulting from that claim".

 

The judge added: "When I asked Mr Napier (Rangers QC) if he could clarify Rangers' position in relation to the HMRC claim for £49m...he was not able to assist as he had no instructions in relation to that matter.

 

"I must therefore treat Mr Bain's assertions as to the extent of HMRC's claim as uncontradicted, although I acknowledge that the claim itself is the subject of an appeal by Rangers."

 

Elsewhere in the opinion, Lord Hodge noted that Rangers pointed out that Mr Bain had a 39-month contract agreed with the club in September 2009.

 

The club's QC said that a long-term service contract of this length was prohibited under the Companies Act 2006 unless it had been approved by a resolution of the members of the company.

 

Mr Bain's QC said his client did not know whether the members of Rangers had approved the contract.

 

Lord Hodge added: "I found that surprising as I would have expected the chief executive of a public company to be aware whether or not his employment contract had the needed shareholder approval."

[aweebluesoandso 290]

I guess we all knew, but reading this brings a tear to the eye.

 

http://www.bbc.co.uk/news/uk-scotland-glasgow-west-15041278

 

A judge who froze £480,000 of Rangers assets has said the club's new owner recognises it could go under if it loses a disputed £49m tax claim.

 

The detail emerged in a published opinion from judge Lord Hodge, who is hearing former chief executive Martin Bain's case for unfair dismissal.

 

The judge said the takeover deal for Rangers had been structured to protect the new owner if the tax case was lost.

 

He said this was "an appreciation...of a risk of insolvency".

 

Mr Bain is pursuing a £1.3m damages claim against Rangers at the Court of Session in Edinburgh.

 

He raised the claim alleging breach of contract following the takeover at Rangers FC by venture capitalist Craig Whyte from former owner Sir David Murray.

 

'Not persuaded'

 

On 13 September, Lord Hodge granted a warrant to ring-fence £480,000 of the Ibrox club's assets, pending the outcome of Mr Bain's case, after deciding there was "real and substantial risk of insolvency".

 

 

Martin Bain is suing Rangers for unfair dismissal This centred on the, as yet undecided, outcome of a disputed tax claim from Her Majesty's Revenue and Customs, which totals £49m in tax and penalties.

 

In his written opinion, Lord Hodge stated: "I am not persuaded on the material placed before me that Rangers is presently insolvent on either of the tests of practical insolvency or absolute insolvency."

 

The judge, however, said he did believe there was a genuine threat to the club from the tax case and believed the new owner fully recognised this threat.

 

Lord Hodge referred to a circular sent to shareholders of Rangers on 3 June 2011.

 

He stated that this document "disclosed that The Rangers FC Group Limited (formerly Wavetower Limited) had purchased 85.3% of the shares of Rangers for the cash sum of £1 and had given certain undertakings".

 

Continue reading the main story

â??

Start Quote

I would have expected the chief executive of a public company to be aware whether or not his employment contract had the needed shareholder approval�

End Quote

Lord Hodge

 

Judge

Lord Hodge said The Rangers FC Group Limited had taken over Rangers' £18m indebtedness to the Lloyds Banking Group, "and obtained an assignation of the bank's securities over Rangers' assets".

 

According to the circular, this debt would be waived if Rangers had "not suffered an insolvency event within 90 days of the club's appeal in relation to the tax claim".

 

The judge noted that until the case was settled, and the debt was waived, all investment in Rangers by The Rangers FC Group Limited would be treated as increasing the club's debt to it.

 

Lord Hodge concluded that "this carefully structured deal" through which The Rangers FC Group Limited has secured a charge over Rangers assets and made the waiving of the club's debt conditional on a positive outcome to the tax case, "shows an appreciation by The Rangers FC Group of a risk of insolvency resulting from that claim".

 

The judge added: "When I asked Mr Napier (Rangers QC) if he could clarify Rangers' position in relation to the HMRC claim for £49m...he was not able to assist as he had no instructions in relation to that matter.

 

"I must therefore treat Mr Bain's assertions as to the extent of HMRC's claim as uncontradicted, although I acknowledge that the claim itself is the subject of an appeal by Rangers."

 

Elsewhere in the opinion, Lord Hodge noted that Rangers pointed out that Mr Bain had a 39-month contract agreed with the club in September 2009.

 

The club's QC said that a long-term service contract of this length was prohibited under the Companies Act 2006 unless it had been approved by a resolution of the members of the company.

 

Mr Bain's QC said his client did not know whether the members of Rangers had approved the contract.

 

Lord Hodge added: "I found that surprising as I would have expected the chief executive of a public company to be aware whether or not his employment contract had the needed shareholder approval."

 

So Bain awards himself a substantial pay increase and bonuses plus extends his contract, but does not know if this was approved by the shareholders. I thought that Bain's increased salary and terms to his contract would need to be approved at the AGM?

 

Anyways it's pretty negligent of him not to know the answer to this, especially as he has had time since his removal to check his diary or extended contract to see who co-signed it off?

[Guest Dutchy]

Everytime I hear about the intricacies of company deals, I'm left with a sick feeling in the stomach.

 

This causes me to spew more than others. I'm thinking with all I hear about the state of the economy and the potential hunt for tax dodgers, i'm forced to conclude that the government are not going to be shaken off as easy as Whyte lawyers think.

 

Of course, the case is still to be heard, so the best we can do is wait and see.

[craig 5,195]

[/b]

 

So Bain awards himself a substantial pay increase and bonuses plus extends his contract, but does not know if this was approved by the shareholders. I thought that Bain's increased salary and terms to his contract would need to be approved at the AGM?

 

Anyways it's pretty negligent of him not to know the answer to this, especially as he has had time since his removal to check his diary or extended contract to see who co-signed it off?

 

It is extremely unlikely that Bain awarded himself a substantial pay increase. Public entities would normally have corporate governance issues, one of which is executive pay and it is also one which is topical. A compensation committee or, at the very least the Board, would be the ones that determine what Martin Bain's salary and bonuses would be. Bain may be public enemy #1 but to suggest he gave himself a pay raise simply because he is CEO is highly unlikely.

 

Him not knowing if it was approved by the shareholders though shows that he was not captaining a tight ship. The Companies Act dictates how companies should work and a CEO contract of employment in excess of the Companies Act restrictions would be highly irregular. This MIGHT work in Rangers favour (although I am no lawyer)

 

It is most definitely negligent of him, the laweyers, the accountants or the payroll staff to not know the restrictions on executive contracts.

 

It should actually be very, very easy to find out whether or not the members approved it as there should be minutes of the AGM and any resolutions undertaken at such meeting would need to be minuted. Shouldnt be a difficutlt task to undertake.

 

One thing is that this certainly puts Bain in a poorer light even if he wins his case.

[craig 5,195]

Everytime I hear about the intricacies of company deals, I'm left with a sick feeling in the stomach.

 

This causes me to spew more than others. I'm thinking with all I hear about the state of the economy and the potential hunt for tax dodgers, i'm forced to conclude that the government are not going to be shaken off as easy as Whyte lawyers think.

 

Of course, the case is still to be heard, so the best we can do is wait and see.

 

Thankfully the law lords and the privy council (which, I believe, is the highest power of appeal) will apply the Tax act to its fullest extent - so if they believe that we acted within the law then they will find in our favour. Not an easy thing to do when tax can be such a grey area.

[GovanAllan 0]

Well Craig I hear what your saying but going by the judge Bain wrote his own contract and signed it without even wondering if the board would approve it which to me stinks the money grabbing baldy twat, this is a man who was giving himself a huge wage increase and massive bonus structure when we where having to sell our top striker because we wouldn't pay him 13k a week.

 

And by the way he is so unconcerned if the board signed off on the new contract it obviously wasn't the first time he had did it the whole mess stinks to high heaven. I for one hope we start to see criminal proceedings against some of these twats.

[der Berliner 3,231]

The judge added: "When I asked Mr Napier (Rangers QC) if he could clarify Rangers' position in relation to the HMRC claim for £49m...he was not able to assist as he had no instructions in relation to that matter.

 

"I must therefore treat Mr Bain's assertions as to the extent of HMRC's claim as uncontradicted, although I acknowledge that the claim itself is the subject of an appeal by Rangers."

 

So essentially the headlines that sprang up this morning are based upon a "no-statement" of our QC? For said QC has not been given permission to speak about or insight in our HMRC situation? So essentially there is no news whatsoever, only another bout of scare-mongering from information already known (or unknown, for that matter)? Well, well ...

 

On 13 September, Lord Hodge granted a warrant to ring-fence £480,000 of the Ibrox club's assets, pending the outcome of Mr Bain's case, after deciding there was "real and substantial risk of insolvency".

 

Ain't that utter rubbish? Even if we lose the big case, we will challenge it and this could drag on for months if not years, so freezing money on the basis of a court case that will soon be finished (I assume) is a touch over the top, isn't it?

Edited September 24, 2011 by der Berliner

[der Berliner 3,231]

On a sidenote ... anone heard anything about the much publisized "showdown talks" between King and Whyte, as we were told he jetted in for those ahead of the OF game? Or was that just another of "those headlines"?

[Guest Dutchy]

When Bain did get his increase, I remember Murray saying it was for his loyalty in working without any over the previous years. That's all I can remember about his big wage hike.

[craig 5,195]

Well Craig I hear what your saying but going by the judge Bain wrote his own contract and signed it without even wondering if the board would approve it which to me stinks the money grabbing baldy twat, this is a man who was giving himself a huge wage increase and massive bonus structure when we where having to sell our top striker because we wouldn't pay him 13k a week.

 

And by the way he is so unconcerned if the board signed off on the new contract it obviously wasn't the first time he had did it the whole mess stinks to high heaven. I for one hope we start to see criminal proceedings against some of these twats.

 

Allan, can you point to where in the judges statement that Bain wrote his own contract ? The only piece I see is where the judge says he found it unusual that the CEO didnt know whether it was approved by the members. Even if this didnt happen it doesnt mean that the board didnt approve his salary and bonuses. Sorry, but I still dont see where Bain awarded himself the salary and bonus. Until you can point out where this is stated then it is all supposition. You, I, and everyone else can go on about how he awarded himself these payments doesnt mean it happened. It would be incredibly poor corporate governance for a public entity such as Rangers to allow the CEO to award himself his own salary and bonus. In fact I would be astounded if this had happened. SDM, and latterly Johnston, would have been responsible (assuming no compensation committee or board decision) for setting Bain's salary and compensation. And, in fact, if Bain had awarded himself his own salary and bonus then it should be expected that the auditors would highlight this as a management letter point (which highlights weaknesses within the company).

 

Simply, I dont think Bain awarded himself his pay raise and bonus. There are too many other people who should be involved in the process. If he has, or if he has paid himself over and above what his contract stated then that would possibly be criminal. As I say though I doubt he has.

 

Your final paragraph actually lends credence to what I am suggesting. You say "he is so unconcerned if the board signed off on the new contract" - read what the judge said again....... the judge says "members of Rangers" and also states "resolution of the members of the company" - members does NOT mean members of the Board. It means members, as in shareholders.

 

Be careful to read what is written (or said) and not what you want to be written.

 

Bain's extended contract needed to be approved by a shareholder resolution, not the board - I would be absolutely astounded if this had happened, certainly not without the regular punters knowing about it anyway because ALL shareholders would have been given notice of the shareholder's resolution.