Rangers administration: creditors set to lose 90% of their cash

[ian1964 10,486]

By STEPHEN HALLIDAY

Published on Wednesday 30 May 2012 00:00

 

RANGERS administrators Duff & Phelps will ask creditors to accept less than ten pence in the pound in a bid to spare the ailing club from liquidation.

 

Proposal documents for a Company Voluntary Arrangement (CVA) meeting, which will take place at Ibrox Stadium on 14 June, were formally issued to creditors and shareholders yesterday. If successful, Rangers will exit administration on 12 July.

 

A total of about £55 million is owed to unsecured creditors. The 60-page CVA document does not specify a pence-in-the-pound figure, but it is understood creditors will be offered between 8p and 9p in the pound.

 

Prospects of the CVA being accepted effectively lie with investment firm Ticketus, owed £26.7m from the season ticket deal struck with businessman Craig Whyte ahead of his takeover of the club last year, and Her Majestyâ??s Revenue & Customs (HMRC), which is owed £21.5m.

 

If it accepts the deal, Ticketus would get back only about £2.5m and HMRC around £2m.

 

Duff & Phelps, as secured creditors, are in line to receive full payment of the £5.5m in charges they have racked up since being appointed as administrators of Rangers on 14 February.

 

For the CVA to succeed, it will require 75 per cent approval in value of creditors or 50 per cent in value of the members voting on the offer.

 

Charles Green â?? the Yorkshire businessman leading the Sevco consortium which has signed a binding contract with Duff & Phelps to purchase Rangers for £8.5m through a successful CVA â?? said: â??Today is an extremely important milestone for Rangers to begin the journey back to where the club belongs, as a leading sporting institution that can hold its head high.

 

â??I have great sympathy with creditors, particularly small local businesses around Ibrox, who have suffered in the lead-up to administration.

 

â??However, I fervently hope that creditors will form the view that the best interests of everyone will be served by Rangers continuing as the successful club it is and recovering as a business.

 

â??The consortium I am leading can only do so much to heal the wounds of the past, but we can do something about the future and that is where our main focus must lie. I hope creditors will approve this proposal and we can begin the task of rebuilding Rangers in earnest.â?

 

If the CVA fails, Mr Greenâ??s consortium has committed to paying £5.5m for Rangersâ?? assets and forming a newly constituted club, or â??Newcoâ?.

 

That option is conditional on both the Scottish Premier League and Scottish Football Association guaranteeing a continuing place for the reformed Ibrox club in the top flight of Scottish football.

 

Paul Clark of Duff & Phelps is optimistic the CVA can be achieved to rescue Rangers from what he described as a â??catastrophicâ? period in their 140-year history. He said: â??This proposal offers the best return for all stakeholders given the position the club is in.

 

â??If approved by the creditors, the CVA will rescue the club and finally enable the company to exit administration.

 

â??Since our appointment, it has been our principal objective to propose a CVA, which is the preferred solution to what has been a catastrophic period for the club.

 

â??That view is shared by everyone with Rangersâ?? interests, and those of Scottish football, at heart.

 

â??We should remember there are many stakeholders who have suffered financial losses as a result of Rangers being placed into administration. Regrettably, there is no solution available that allows these parties to recover their losses in full.

 

â??However, after a very intensive bidding process for the club we can now say that the offer being put forward as part of the CVA is the best solution available to creditors and we hope they will approve the proposal.

 

â??Having issued the proposal, it is now a matter for the creditors to consider what is on offer and it is their decision entirely as to whether the terms of the CVA are acceptable.â?

 

In a statement, Duff & Phelps confirmed the exact amount creditors can expect to receive will not be known for months.

 

It read: â??The administrators intend to make a distribution to creditors as soon as they can should the CVA proposal be approved.

 

â??The overall costs of the administration process will be deducted from the funds available.

 

â??All costs and charges incurred in the administration and the CVA are proper expenses at levels which are in keeping with best practice guidelines set by insolvency practitionersâ?? regulatory bodies.

 

â??All of the administratorsâ?? own costs are subject to approval by creditors.

 

â??The final amount available to creditors could be in excess of £25m. The precise amount will not be known for some months.

 

â??At this stage, there are two outstanding issues that will have an affect on the quantum of funds which can be distributed to creditors.

 

â??The first is litigation brought by the administrators against the former lawyers for Rangers, Collyer Bristow. Should that be successful, further funds will be made available to creditors.

 

â??The second is the outcome of the HMRC first tier tax tribunal. Should the tribunal find against Rangers that will increase the quantum of HMRCâ??s claim on funds available to creditors.â?

 

The CVA proposal is being sent to about 400 trade creditors, more than 6,000 fans holding debentures and all of the clubâ??s shareholders. If the plan is approved at the June meeting, there will be a 28-day cooling-off period before Rangers could come out of administration.

 

If no CVA is agreed, Mr Green plans to push through a Newco purchase of the assets.

 

http://www.scotsman.com/news/scottish-news/top-stories/rangers-administration-creditors-set-to-lose-90-of-their-cash-1-2325734

[foggy dewhurst 0]

it might be hard for creditors to take this offer when they see duff and phelps being payed in full for hanging it out , they have not in my opinion been competant or swift with their handling of the matters in hand they have dragged it out to their own benefit .

[GovanAllan 0]

Quickest Admin period in football history, you can hardly call it dragging it out. The mess we were left in it's a miracle it looks like being over before the new season starts.

[the gunslinger 3,366]

for being quick and it has in relative terms its been hellishly expensive.

 

something else that might be challenged.

[GovanAllan 0]

for being quick and it has in relative terms its been hellishly expensive.

 

something else that might be challenged.

 

Not disagreeing there bloody license to print money.

[caseyjones 0]

Quickest Admin period in football history, you can hardly call it dragging it out. The mess we were left in it's a miracle it looks like being over before the new season starts.

 

Nonsense.

 

Livingston(twice), Millwall, Bradford, Hull, Leeds, Southampton............

[andy steel 0]

" If successful, Rangers will exit administration on 12 July."

 

It's a conspiracy, I tells ya!

 

edit: no fan of the OO, but this would be a supersweet twist of the knife for the haters.

[calscot 0]

Administration is a weird thing. You take a company in financial straits and then charge them £1m a month for a few people to run them "better"...

 

The irony is that if they were in charge for that fee without admin, we'd be out of business.

 

Surely something like £200k a month should be way more than enough to get some decent business brains in?

[boss 0]

So, a fairly normal outcome for a CVA then...

[der Berliner 3,327]

Nonsense.

 

Livingston(twice), Millwall, Bradford, Hull, Leeds, Southampton............

 

Yes, on face value you are correct. Still, it was - so far - fairly quick, given the legal mine-field left behind by Murray, Lloyds and Whyte. People are free to compare the length of administrations in the British game*, and in Scottish terms and with regards to the hazardous deals by our previous owners, D&P were not slow. Were they expansive? Who knows? Anyone double-checked admin costs for other clubs?

 

* As well as penalties dealt.