Judge Lord Hodge States The Reality

[Bluedell 5,342]

Yes we are Danny. If we lose the tax case then we possibly would enter insolvency (effectively winding the club up). It is more likely than that, however, that we would enter administration (which is to protect the company against creditors, work out all the assets under an administrator and attempt to get creditors agreement on repayment on some terms less than par - so if we owed a quid we would look to pay less than a quid).

 

Insolvency is extremely unlikely.

 

I would reckon Whyte has already planned for losing the tax case (he should have....) such that if we lose it we will enter administration, appoint a favourable administrator, Whyte will effectively buy the club AGAIN at a reduced cost to what the liabilities of the club are.

 

The whole takeover was designed to protect Whyte if the worst case scenario happens so he definitely has been planning for it.

 

However, it must also be remembered that the club's tax advisers (from what I have read the guy retained is one of, if not the, most prominent of tax lawyers in the country) are very confident we will win the case.

 

We don't know if they are confident of winning the case. They are always going to say that they are confident, even if they feel they have only a 10% chance of winning.

[Bluedell 5,342]

Whilst I hope you are correct lets not hope that SDM also had a share issue which allowed the club's fans to have a level of ownership in the club..... I dont think we even got as much as 5 mill from everyone combined, aside from SDM.

 

There is no guarantee that the club's fans would contribute, especially when you consider the hardships in the current financial climate.

 

The share issue was seen by most as SDM contributing to the losses that he had run up and many did not see it as their responsibility to contribute.

 

A future share issue would be seen differently and therefore the amount contributed from the support may be different.

 

However your point about the financial climate and also the fact that the general public's appetite for share purchases has lessened from the 80s and 90s following the market falls post 9/11 and post banking crisis and therefore the amounts raised may be far less than they would have been more than 10 years ago.

[Zappa 0]

The whole takeover was designed to protect Whyte if the worst case scenario happens so he definitely has been planning for it.

 

Is that essentially the same as saying "the whole takeover was designed to protect Rangers if the worst case scenario happens" ??

[craig 5,199]

Is that essentially the same as saying "the whole takeover was designed to protect Rangers if the worst case scenario happens" ??

 

I dont think it is.

 

Whyte will have been looking to protect Whyte. There is certainly a chance he would be looking to also protect the club but most likely is he was looking to protect his investment. Should the club enter administration then he has to give up control to the administrator which makes things less certain for him, so he would be more likely to just protect his investment.

[craig 5,199]

Insolvency is extremely unlikely.

 

Agreed, hence why I said "possible" and why I said administration was more likely

 

 

 

The whole takeover was designed to protect Whyte if the worst case scenario happens so he definitely has been planning for it.

 

Yep. Dont know about you but I would actually be disappointed if he WASNT planning for the worst case scenario. It would show extreme short-termism, a complaint we had about SDM. Even if it happened and it was unpalatable, worse than it happening would, IMO, be that Whyte hadnt planned for it and thererefore struggles to deal with it.

 

We don't know if they are confident of winning the case. They are always going to say that they are confident, even if they feel they have only a 10% chance of winning.

 

True. And none of us know enough about the case (at least I dont as it is a loooooonnngggggg time since I had to deal with ANY UK tax let alone something specific as employee trusts). to know whether this public confidence is warranted or not. In fact, even if it were warranted and they were very confident both in public and in actuality, the reality remains that there is absolutely no saying what decision would be made by those hearing the tribunal. As you and I both know full well, one man's interpretation of tax law may seem legitimate but it also depends on how you present your case in terms of how the tax legislation works. Our tax lawyers could be 100% convinced we will win the case..... and we could lose it. Just to prevent mass hysteria the same could be said for HMRC's QC, they could be 100% convinced they will win the case.... only to find out we win it.

[Zappa 0]

I dont think it is.

 

Whyte will have been looking to protect Whyte. There is certainly a chance he would be looking to also protect the club but most likely is he was looking to protect his investment. Should the club enter administration then he has to give up control to the administrator which makes things less certain for him, so he would be more likely to just protect his investment.

 

It seems to be somewhat of a grey area when you include what's been done with some of the club's assets since the takeover. You'd like to think that the most important thing would be to protect the future of the club. Maybe that's what concerned AJ.

[craig 5,199]

It seems to be somewhat of a grey area when you include what's been done with some of the club's assets since the takeover. You'd like to think that the most important thing would be to protect the future of the club. Maybe that's what concerned AJ.

 

There is a difference though between pre and post takeover Zappa.

 

Going in Whyte would have wanted to protect himself.

 

Once the owner it is obvious that he would want to protect both the club and himself. But you can be assured that it is still more important to protect himself than to protect the club. If he protects himself in the event the club goes under then he still personally can walk away with the remainder of his wealth intact. If he doesnt then he could lose his own fortune too. Once the owner it makes sense for him to protect the club too wherever possible.

 

But the vast majority of people will look to protect themselves first and foremost and the investment secondarily.

[GovanAllan 0]

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.

 

And the biggest shareholder was Murray still looks to me that he was given carte Blanche to right his own ticket. A 36 month contract with a 12 month notice period is unheard of especially when the management team are working without a contract.

 

Have spoke to shareholders who where at the AGM and they can't remember anything about the details of his contract being discussed.

Edited September 26, 2011 by GovanAllan

[aweebluesoandso 290]

It looks to me like Bain had an nod and a wink from SDM regards his pay rise and contract, but it was never ratified by the shareholders or at the AGM. NO CHANCE OF THIS EVER BEING ADMITTED THOUGH FROM EITHER PARTY?

 

I think Bain has been caught with his trousers down on this issue. How it affects his claim is another matter, one for the legalese on here.

[craig 5,199]

And the biggest shareholder was Murray still looks to me that he was given carte Blanche to right his own ticket. A 36 month contract with a 12 month notice period is unheard of especially when the management team are working without a contract.

 

Have spoke to shareholders who where at the AGM and they can't remember anything about the details of his contract being discussed.

 

A 39 month contract with a 12 month notice period isnt unheard of, happens in many companies.

 

The management working without a contract is unusual but they did so because of the takeover. In a takeover situation it is more important to have a CEO than to have a manager.

 

If his details werent discussed at the AGM then it is likely that this was never approved. Unless all other shareholders gave proxy - in fact, even if they did, it would still need to be brought to the sharholders as a resolution. Even if SDM could control that vote himself there is still protocol to follow and having the resolution tabled to the shareholders is one such protocol.

 

It could be that both SDM AND Bain had their trousers down with this one. It could be that Bain loses this case on a technicality (non-compliance with Companies Act) but that he could then possibly sue SDM for negligence. Again, I am no lawyer so dont know, but certainly seems plausible.