Possible Dividend for Creditors

Whilst D&P have made it clear that there are many anomalies, this appears to be the most accurate indication of the dividend available for the unsecured creditors of The Rangers Football Club Limited.



Feel free to ask us any questions using the comment box below.

RANGERS FC, HMRC and CVAs

Let’s examine HMRC’s conditions and in particular those conditions that may preclude HMRC from accepting any proposal delivered by Rangers FC.

A Company Voluntary Arrangement (CVA) can be an effective way of restructuring the debt of a company and, when successful, results in the company’s survival.

A few months ago, CVAs were a relatively unknown effective business tool, particularly in Scotland. They have now been brought into the spotlight due to the situation at The Rangers Football Club plc.

A CVA requires 75% of a company’s creditors to vote in favour to be successful. It is difficult to predict the attitude of creditors towards any CVA proposal.  However, HMRC provide a guide to its conditions for accepting a proposal, which indicates how they are likely to vote on any proposal. HMRCs conditions are summarised on its factsheet - http://www.hmrc.gov.uk/helpsheets/vas-factsheet.pdf.

Conditions for HMRC accepting a proposal that cannot or may not be achievable –

• an optimised and achievable offer is made to creditors

This is a wide ranging condition, parts of which are covered by more specific conditions below. It does specifically cover HMRCs condition that they expect the Company to pay monthly contributions into the arrangement for a period of 5 years.

• the proposal treats all creditors within the same class equally

There has been no suggestion that the anticipated CVA funded by Charles Green’s consortium will attempt this. Previous bidders proposed treating certain unsecured creditors differently (such as bondholders and TicketUs) and this would have led HMRC to reject the CVA.

• that the open market value of assets is not materially different from the proposal

The offer put to creditors is likely to be rejected if there are independent professional valuations which suggest more money can be raised by ceasing to trade, then selling the assets off separately. If a CVA proposal does not disclose the break up valuations, HMRC will specifically request that information.

• that values being placed upon liabilities are not materially different from the proposal

There needs to be a full disclosure of liabilities. In relation to RFC, this is complicated by the EBT liability raised by HMRC, that has been defended by the club, and is presently subject to a decision by a first tier tribunal.

• full reasons for past non-payment of tax and clear explanation of changes made…

The most obvious reason appears to have been Craig Whyte’s apparent decision not to pay Tax & NI, during his period of control. HMRC will seek assurances that Mr Whyte will not be involved in the affairs of the club going forward, as a shareholder or director.

• evasion of statutory liabilities or past association with contrived insolvency

Proper use of EBTs is widely accepted as good tax planning. Mis-use of EBT resulting in an abuse of the tax system is considered by HMRC to be tax evasion.

• payment of other creditors whilst withholding sums due to the Crown

This relates to the payment of other creditors, whilst withholding sums due to HMRC. It has been widely reported that this happened during Mr Whyte’s period of control.

• failure to meet any obligations under a prior voluntary arrangement

This can apply where the company enters any form of payment arrangement with HMRC, then subsequently defaults.

• exclusion of creditors who are entitled to receive the same treatment as all others within their class

It is essential that all debts due to creditors, are treated equally. HMRC will expect it’s assessment of the unpaid tax liability relating to the EBTs to be dealt with by the proposal.

• a purchaser assuming responsibility for payment of some of the debts in consideration for the purchase of the debtor’s assets

There has been no suggestion that Mr Green’s proposal contains such conditions. Previous bidders did make this a condition of their bids, and such conditions would have led those bidders’ proposals to be rejected.

Those with a keen eye may have noticed that there is little guidance on the level of dividend which HMRC expect, other than the proposal to creditors is required to be optimised.   Our two most recent CVAs proposed around 35p in the £, and HMRC successfully negotiated these up to around 70p in the £. Whilst this should not be taken as any guide whatsoever in relation to RFC, these examples evidence the influence HMRC has in CVAs, where it has 25% or more of the voting rights.

If a CVA is accepted by at least 75% of the creditors of RFC, then the club will avoid the sanctions that are anticipated to be levied against it, if it seeks to re-enter the SPL through the newco route. Therefore, achieving a CVA clearly has benefits for those involved with the Club.

However, taking into account the foregoing analysis, it is clear that the Company has never been able to meet HMRCs conditions for accepting a CVA in the recent frantic months and it would prudent for those involved to anticipate HMRC rejecting the proposal.

Allan McLeod is a Senior Manager at MLM Solutions, who are Scotland’s leading provider of CVAs and successfully negotiate with HMRC to meet their conditions for accepting CVA proposals.

Maureen Leslie, Director of MLM Solutions, is a regular commentator on BBC Newsnight Scotland and Reporting Scotland regarding CVAs and corporate insolvency matters.

So What Does Mr Miller's Bid Amount To For Rangers?

Duff and Phelps today announced that Bill Miller is the preferred bidder for Rangers FC.  In their statement published at 12.35, they confirm that under the terms of the deal, the business and assets of RFC are to be ‘sheltered’ in a newco while a CVA is agreed for the existing RFC.  These assets will be returned to Rangers FC “once the plc has been cleaned up”. 

Mr Miller has previously referred to an ‘incubator’ company.  We said in our blog on Monday that we thought this referred to the creation of a subsidiary of RFC by the administrators.  The business and assets of RFC would then be transferred to that subsidiary while the administrators tried to put a CVA in place for RFC plc.  Our reading of the administrators’ statement suggests that we are pretty much on the mark.

In this 2 phase deal, a newco will take forward the business and assets of the club, while the administrators negotiate and work through a CVA with the creditors of the PLC.   

The administrators’ statement has confirmed that the “barriers to a standalone CVA are now too high”.  Those barriers were the difficulty in securing a transfer of shares from Craig Whyte and in securing acceptance of a CVA by HMRC.  Until the outcome of the tax case is known, obtaining that acceptance was almost impossible.

The administrators have said in their statement that Mr Miller’s bid “creates the most suitable framework to deal with the issue of the majority shareholding in RFC plc”.  In other words, Mr Miller’s bid circumvents the need for any action to be taken to secure Craig Whyte’s shareholding (at least at this point).  By selling the business and assets of RFC, they have sidestepped the majority shareholder. 

However, if and when a CVA is agreed and the trade and assets of newco have to be ‘returned’ to Rangers FC plc, the issue will resurrect itself. 

They have also taken the pressure off as far as reaching agreement with HMRC is concerned but there remain significant barriers to securing their consent.

By going forward with the Miller bid, the Football Club can prepare for next season with some certainty about its financial position subject of course to the outcome of the appeal against SFA sanctions and the terms upon which the SPL will agree to its admission.  Mr Miller’s bid is now unconditional so it would seem that he is satisfied that he can live with whatever terms are imposed.  The Club can therefore be assured that it can start next season free of administration and that must be seen as good news for the fans.

Written by Maureen Leslie.

Is a Trust Deed or a Bankruptcy the best solution for you?

Mortgage repayment costs rising?

Household budget already stretched?

Is a Trust Deed or a Bankruptcy the best solution for you?

Recent press coverage has shown that a number of lenders are poised to increase their standard variable mortgage rates. These lenders are claiming that the rate increases are ‘justified’ and are blaming the ‘weak economy and the increased cost of funding a mortgage.’

Whilst the initial rate hike may not be too large, there is genuine fear in the wider community that further increases could prove problematic for many Scottish households, whose budgets are already stretched to breaking point, as a consequence of ever increasing bills and also having to service existing credit?

So, where does this leave you? Many households will undoubtedly struggle and will be looking for ways to ‘relieve the pressure.’ But how will you do this?

• Pay-day loans?
• Using credit cards to pay for groceries?
• Borrowing from friends and family?

These are all short-term, ‘quick fix,’ answers and, quite frankly, the thought of individuals/households resorting to taking out pay-day loans or, worse still, using a credit card to buy ‘the weekly shopping’ should chill us all to the bone, as the potential for financial disaster is there for all to see.

We, at MLM Solutions, feel that there are other options available to you, other than the ‘quick fix’ remedies mentioned above. These could address the situation in a not so potentially costly, or problematic, manner.

Everyone has heard stories of people who enter into Trust Deeds, or who find themselves declared bankrupt, losing their homes. Whilst that may be true in certain circumstances, it is not always the case and here at MLM Solutions we believe that we have other ideas on how to ‘keep the roof over your head.’ Your home is not necessarily at risk and the majority of home-owners we deal with will retain their properties, whilst, at the same time, relieve themselves of the financial burden of unmanageable credit agreements/loans/credit cards, without having to plunge deeper into debt via the ‘quick fix’ options referred to above, which are all too often promoted in such a way as to suggest that they are ‘the answer’ to your problems!

So, for a free, no obligation chat, either in one of our 3 offices (Glasgow, Edinburgh and Livingston) or in the comfort of your own home, then contact us on 0800 138 0707, e-mail us at debt@mlmsolutions.co.uk or find us on Twitter or Facebook  and one of our team of friendly, professional, debt advisers will contact you to arrange a suitable time to meet and discuss matters further.

For more information on all of our debt solution services, including Trust Deeds and bankruptcies, go to www.mlmsolutions.co.uk

MLM Solutions Q&A Forum - Live Transcript

Thank you to everyone who took time today to join the blog and to engage with us to ask questions that were important to you. We were delighted with the response to the first blog, which was overwhelming, which meant it was physically impossible to respond to all within the 2 hours!  We have summarised the Q@A and do hope you enjoyed it as much as we enjoyed trying to clear up some of the insolvency issues. 

We will endeavour to answer any unanswered questions that we did not have time to respond to today if you leave a message on Facebook, we will get back to you! 

http://www.facebook.com/mlmsolutionsuk

Once again, thank you and we look forward to chatting again soon, in our next blog forum, which will be posted, as the latest developments continue to unfold.

Title:    Save  

11:13	mlmsolutions:  Good morning everyone, the live Q&A forum will begin at 12pm hope to see you there.
11:15	Comment From StevenP  Hi, what time does this event finish?

11:15	Comment From ArleneN  Good morning, looking forward to discussing the latest implications for the club.
11:16	mlmsolutions:  Morning Arlene.

11:16	mlmsolutions:  See you all 12pm
11:17	ArleneN:  Good morning, just checking that the event closes at 2pm?

11:18	ArleneN:  Yes StevenP, 2pm is the scheduled close!
11:37	Comment From Gordon  Best of luck with the live event today.

11:37	mlmsolutions:  Cheers Gordon. any questions?
11:55	Comment From scotbot  Twitter brought me here.

11:55	mlmsolutions:  Hi there - any questions about the latest situation at Rangers?
11:58	mlmsolutions:  Hi Scotbot, glad you have joined us. We are here to discuss the latest events regarding Rangers, particularly from an Insolvency perspective. If you have any questions, please be the first to fire away.

11:58	Comment From Alex  Does Ralp Topping leaving his post as SFA chairman have any relation to Rangers' Liquidation and the new financial/newco rules that have been delayed?
12:00	mlmsolutions:  Sorry Alex - can't really comment as we have no inside knowledge about what lies behind his decision. We're having a look on line at the moment and if we find anything relevant, we'll come back to you.

12:01	Comment From scotbot  Erm, I just want to enjoy the debate. I'm curious about how Rangers bidders propose to cover a CVA when the main creditors are thought likely to block it.
12:02	mlmsolutions:  Hi Alex. Ralf Topping is a bit of a blogger. You can check out his official statement which is here http://www.ralphtopping.com/

12:03	Comment From Gerry  Who is taking part?
12:04	mlmsolutions:  Interesting question scotbot. A CVA needs support from 75% of those creditors present and voting at the meeting which has to be called to consider the proposals. At the moment, it looks like Ticketus or possibly HMRC might be in a position to block. It's not clear to us how the bidders propose to cover this although it's less relevant to Bill Miller than to the Knights

12:04	Comment From John  Can Rangers in administration sell season tickets or do they need to be out of administration before they can sell them
12:04	mlmsolutions:  Hopefully your goodself. Please feel free to fire away:)

12:05	Comment From chris  In your opinion what are the chances of Rangers agreeing a CVA with creditors.
12:08	mlmsolutions:  Hi Chris. The million dollar question. As we said above, they need 75% of those creditors present and voting to get a deal. HMRC is certain to vote in this case and we think it's unlikely that Ticketus will stay out of the process. Unless the CVA provides a substantial return to them, is it likely they will agree? What do you think?

12:08	Comment From Bernard  Are HMRC obliged to treat RFC and their CVA in the same was as any non-football company?
12:08	mlmsolutions:  Hi Bernard. I would say so, yes. Can you think of any reason they wouldn't?

12:09

Comment From Gerry  Would selling all assets individually not see a better return for creditors, than to sell job lot to a newco?

12:10

mlmsolutions:  Hi John. Appreciate the question. The general rule is that a Company which is in an insolvency process cannot accept payment for goods which it may be unable to fulfil. That's not to say that the Administrators could invite payments for season tickets, but they would have to hold those funds in a trust account, in order to protect the position of the season ticket purchaser. There is a further complication with Ticketus. They may litigate, to try and secure the future season ticket monies. Whilst Lord Hodge's Opinion was fairly damning of TicketUs's claim to have security over future season ticket monies, it was still just an Opinion. However, Lord Hodge is one of our greatest legal minds.

12:10	Comment From Guest  re: Topping, does his departure indicate a commercial fear by William Hill on making a decision ?
12:13	mlmsolutions:  Sorry Guest, but we do not know what the sponsors, including WH, are thinking at this time. However, the point of sponsorship is to promote a brand, certainly not to damage it by negative publicity. What do you think yourself?

12:14	Comment From Mcfee  How can we place more scrutiny on these companies who use this 'liquidation' technique as a method to cheat their way out of paying their debt? Surely HMRC can still get them somehow...
12:14	mlmsolutions:  Hi Gerry. In the report published by Duff and Phelps on 5 April, they advise that they had instructed a valuation of all the Club's assets and had concluded there was an enhanced value for sale as a 'going concern' over and above the asset value. In the last accounts, there were fixed assets of £125m or so and therefore this is something the administrators will have to consider

12:14	Comment From David  is there any way the blue knights bid can be accepted as prefered bidder while the cash they are offering is less than bill millers
12:15	mlmsolutions:  Hi David. I think the devil will be in the detail of the Knights' offer. In these kind of deals, the topline figure can often be diluted by specific terms in the contract

12:16

Comment From scotbot  If Rangers are liquidated, ie assets sold, is the revenue used to pay off the creditors. Who has 1st dibs after those whom hold security?

12:19

mlmsolutions:  Hi scotbot. In any insolvency process, first call on the assets comes from anyone holding a standard security. Next comes the insolvency practitioner - D&P in this case - have first call on the proceeds of sale followed by the expenses of the process. That would mean their legal and other costs. Next comes the preferential creditors - usually employees for unpaid wages and holiday pay - then the floating charge holder. Craig Whyte has an assignation of the old charge in favour of Lloyds Bank but D&P question whether he is owed anything at all under that charge. Next comes Ticketus, HMRC and the rest of the unsecureds.

12:19

Comment From steve  how does millers proposed newco route differ from a 'traditional' newco route?

12:20

mlmsolutions:  Hi McPhee. That's a huge question to answer! If anything, we have been moving towards a softer insolvency regime for many years, politicians are trying to foster a more entruepenarial business enviroment. We should celebrate individuals who are brave enough to go out there and set up a business, as it cxan be a huge challenge. However, their must be sufficient safeguards in place to deter those who abuse the system in order to avoid paying tax.

12:20	Comment From Alex  If Rangers do liquidate can they transfer their history through court to the newco from the old liquidated club? Or is this non transferable as I know this method has been used several times in Italy where liquidation has slack rules as a punishment..
12:20	mlmsolutions:  Hi Steve - I honestly have no idea. Never heard of an 'incubator' company but we blogged yesterday saying Administrators have the power to create subsidiary companies and to transfer all or part of trade and assets to that sub. We think that's what Miller has in mind

12:21

Comment From Gordon  Craig Whyte seems to be getting all the blame for the problems at Rangers. Is there anyone else that you think should be held accountable?

12:23

mlmsolutions:  Hi Gordon. The administrators have to submit a report on Directors' conduct to the Insolvency Service, part of the Department of Business, Innovation and skills. The ultimate sanction here would be disqualification - Craig Whyte has previously fallen foul of that regime. However, the administrators also have to consider the conduct of people who have been directors in the last 3 years before the date of administration so all previous directors will fall into that investigation

12:24

Comment From Richard  Have you ever known an Administrator be in charge for so long and not make a single reducndancy?

12:27

mlmsolutions:  Hi Richard. You make insolvency practitioners sound as if we wield machetes - or axes I suppose! We often try to save jobs - by saving the company if at all possible or by selling its business and assets and having employees transfer under Transfer of Undertakings provisions. But yes, given that the Club was allegedly running at a loss, you might think it was prudent for administrators to use some of the powers they have to get it in better shape for a buyer? What do you think?

12:27	Comment From Christopher  What Is Your Thoughts Of What An Incubator Company Is ? Have You Seen This Is Action Before
12:28	mlmsolutions:  Hi Christoper - have a wee look at the response to Steve up above. We think its a subsidiary with a hive down of trade and assets from RFC

12:28	Comment From Neil  Do you think the bank would have called in Rangers debt resulting in possible liquidation had Craig Whyte not done the deal with Murray?
12:30	mlmsolutions:  Hi Neil. Don't really think so. If the bank had been at all minded to appoint in this case, it would have been an administration. But it looks more like the Bank was working out its position - the debt had come down from, £33m to £18m (or thereabouts) over the previous 3 years.

12:31	Comment From Lord0  How can D+P justify continued Administration while allowing Rangers to rack up more and more debt? e.g. this seems to be the only admin ever where no one has been paid off...
12:33	mlmsolutions:  I think they're expecting some further income from prize money and possibly prize money which should make the trading position neutral. Have you taken a look at the Receipts and payments account in the D&P report?

12:33

Comment From Bernard  Hi. Are HMRC likely to have a different approach with respect to approving a CVA etc with Rangers than a non-football company?

12:33

mlmsolutions:  Hi Alex, not an easy one to answer, as there is no legal precedent in Scotland to really on. However, there are loads of indicators. Firstly the Administrators will sell the Intellectual Property & Goodwill of The RFC plc to a newco. Which they have the rights to do. If you look at instances where clubs have continued after a newco (or liquidation) such as Leeds, Luton, Rotherham, Fiorentina, Airdie United, it is clear from all these example that the history is accepted to have continued. This is demonstrated by the information on those clubs on their websites, wikipedia, and I think the most indicative authority, which is UEFAs website. The Airdrieonians / Airdrie United example is fascinating, as Airdrieonians did fold completely. However Airdrie United still operate and every Airdrie fan still laments Kenny Black's european goal back in the 1980s. There are concerns that someone may challange the histroy issue if a sale to a newco happens. The questions I would ask is, who would have a right to challenge it, where would the jusrisdiction lie, where is the legal framework that would allow a challenge. Hope that helps.

12:34	Comment From johns  re: Topping, could the Topping resignation relate to the commercial backlash that William Hill might risk in him having the deciding vote?
12:35	mlmsolutions:  Hi Johns, please check response above at 12.02 Many thank Allan

12:35	mlmsolutions:  Hi Bernard - we don't think that's likely. HMRC has to treat all companies in the same way. We put a link to their guidelines on dealing with CVAs on our blog yesterday. You might find that useful
12:35	Comment From Gaz  we keep hearing from the same people HMRC don't do deals, ie CVA. is this your experience

12:35	Comment From Sherbo  Does a proposed CVA need to run a full 5 weeks before a decision is announced, wether agreed or declined?
12:36	Comment From Colm Limerick  Was Neil Doncaster mixing up NewCo coming out with a CVA & NewCo with Liquidation yesterday?

12:38	mlmsolutions:  Hi Sherbo - good question. The administrators have to give at least 14 days' notice of the meeting of creditors which has to be called to consider the proposals. Creditors can propose modifications to the proposals at that meeting and the meeting can be adjourned for another 14 days to allow time for these modifications to be considered. So, minimum 14 days to reach agreement.
12:38	Comment From Stewart  Hi...was just wondering, with liquidation meaning HMRC/Ticketus would find it even tougher to get their money, do you think it's likely either party would block a CVA if they can?

12:40

mlmsolutions:  Hi Colm Limerick, I don't think he was particularly clear on that matter. However, he was clear about the penalties that will be applied, which are the penalties under the existing framework - 10 points on entering an Insolvency Event (which was saw earlier in the season. Of course there is no existing framework to consider the re-entry of a newco to the SPL, therefore it will come down to a vote by all of the Clubs. That will be an interesting day in the life of the SPL!!!

12:41

mlmsolutions:  Hi Stewart - not sure why you think liquidation would make it harder for Ticketus to get their money? Especially now they are out of the deal with the Knights? As far as HMRC is concerned, you might like to look at our blog yesterday which has a link to their guidelines on how they deal with CVA proposals. There's a good section on why they will reject what seems to be a good commercial offer

12:41	Comment From Vatican Stroller  Craig Whyte has a floating charge... what is this and how much is it likely to be?
12:41	Comment From steve  if ticketus accept a figure for the pound - can they still chase whyte for the rest of the money owed?

12:42	mlmsolutions:  Hi Steve. The answer is yes.
12:42	Comment From Alex  Is it legal to have the club in administration to appoint a administrator that has the current club chairman has links to? I'm refering to Craig Whyte and his links to Duff&Phelps where he used to a company secretary and director?

12:44

mlmsolutions:  Hi Vatican Stroller - a floating charge is a form of security over a company's assets. Unlike a mortgage, it is not over any specific asset but assets generally. In the event of default or insolvency, the charge fixes on the assets. Effectively, if Whyte's charge is valid, it puts him further up the pecking order when it comes to paying out. In the D&P report of 5 April, they value Whyte's claim at £1. However, i would expect him to challenge that - you seen comments by Collyer Bristow - his lawyers - in today's Herald?

12:44

Comment From Bob  Can anything be agreed until the full tax position is know. In terms of cva, if not surely all the activity is pointless at this moment?

12:49

mlmsolutions:  Hi Alex, In D&Ps report dated 5 April they concluded that they did not have a conflict. See para 5.24. However, the general guide is that there cannot be a material professional relationship between the IP (D&P) and the debtor company (RFC plc) within the last three years. Perhaps, some further explaining to do by D&P here. What do you think yourself?

12:49

mlmsolutions:  Hi Bob - great question. In theory, D&P could call a meeting to consider CVA proposals on 14 days' notice. They could do this as soon as one or other of the bids becomes unconditional. HMRC would be entitled to vote for the full amount of unpaid PAYE - £15m or so. D&P could be very bold and say that they will only admit HMRC's claim for the big tax case to rank for voting at £1 since the outcome is not known. I guess it could still be found in Rangers' favour. However, this would be liekly to be challenged by HMRC in pretty strong terms and, if the case were found in favour of HMRC at a later date, the CVA would probably fail anyway

12:49	Comment From Mark  Bill Miller's bid mentions an "incubator" company - does such a thing exist under UK law and is it not just a way of dressing up a liquidation of the old company?
12:49	Comment From Danny  it sometimes seems that D&P have been more worried about the club & not the creditors and they seem determined to make BK the winner any thoughts on how it has dragged on

12:51

mlmsolutions:  Hi Mark - see above. WE don't think any such thing exists. We think this is amounts to a creation of a subsidiary company and a hive down of trade and assets. If the original club survives a CVA, the trade and assets coudl be hived back up at a later date. If however, the CVA failed or the old co went into liquidation, it would not be fatal to Miller's bid unless that is a condition of the bid

12:52

mlmsolutions:  Hi Danny, we posted on our blog yesterday that "Although saving the company is the first purpose of administration, this cannot be pursued at any cost. " Here's the full blog - http://mlm-solutions.blogspot.co.uk/

12:52	Comment From Richard  also have you ever known an Admin to ask for such a large non refund deposit when there are two clear bidders for only a 2 week exclusivity?
12:54	mlmsolutions:  Hi Richard - another good question. However, on balance, we think this is reasonable in the circumstances. Seems to have been a bit of posturing on the part of some of the bidders so D&P right to look for a real financial commitment.

12:54	Comment From luke  What will the administrators require to do to get paid? Are there any protections for the creditor?
12:55	Comment From Johnny  How long in your opinion does Rangers have left before liquidation is the only option?

12:57

mlmsolutions:  Hi Luke - reasonable question. They need to gain approval for their fees from the creditors. However, they included in the proposals they issued on 5 April that their pay should be fixed with reference to the hours they spend on the job (Resolution 4). And yes, there are protections for creditors. Try our website for Creditors' guide to fees or just google it. BE sure to look for Adminsitratior's fees in Scotland - England is different

12:57

Comment From steve  How do you rate the administrators performance so far?

12:59

mlmsolutions:  Great quetion Johnny. The key here is cash. The Administrators cannot continue to rack up trading losses. We are told that after the end of May, the wage Bill is back to it's pre Administration levels (before the agreed pay cuts). However, if a prospective purchaser came along and said, "here's a few million in order to cover the ongoing trading costs" then it would continue. And this is what often happens in these distressed scenarios.

12:59

Comment From Georgethebear  if you were the administrator would you go for a newco or CVA.

1:03

mlmsolutions:  Wow Steve - that's some question! This must be one of the most difficult jobs to come up in Scotland for a long time! One of the things which makes insolvency such a great career is the need to make decisions very quickly and on the basis of quite limited information. Often information comes to light which makes you question your original decision or strategy and it's important to be brave enough to change it where necessary. But hindsight is denied us at the time! I guess the question for them at the end of all this will be ' would we showcase this job as one of our finest?'

1:03

Comment From Craig  I think what most folk don't understand is how can anyone consider investing in any business with the possibility of a huge tax bill hanging over it?

1:04	mlmsolutions:  Hi Craig. A good observation. However, the objective of this type of insolvency is to save the good parts of this business while freeing a new owner from an historic debt mountain. Whether by CVA or liquidation, this should be achieved.
1:04	Comment From iain  hello. what are the chances of HMRC agreeing to CVA ?

1:05

Comment From Tommy  In a CVA, do all parties have to be treated equally? What rate of return are HMRC likely to consider agreeing to?

1:07

mlmsolutions:  Hi Tommy. Yes and no. A CVA cannot vary the rights of secured creditors without their consent. So - banks with standard securities over fixed assets or creditors who hold a bond and floating charge (liek Craig Whyte for example). But all creditors within that class have to be treated equally. That's why the Knights' deal with Ticketus - who are essentially an ordinary creditor like HMRC - would have given HMRC cause to object

1:07

mlmsolutions:  Georgethebear, based on everything we know at this point in time I would comment as follows - It appears that a CVA is very unlikely at this point in time. The only downside to giving it a go, is the further uncertainty between now and getting it approved. Remember, we appear to be someway off even submitted a CVA proposal, as the potential EBT remains unknown and it would be an essential pre-condition of a CVA that Craig Whyte would have to already have given up his shareholding. On the other hand, an Administration to a newco does not need those factors to be resolved. It does of course come with some know and some unknown penalties and sanctions. The Bill Miller proposal covers off both angles, but he's used some rather exotic language to get his point across.

1:08

Comment From Frank  I believe that players move back to full salary from 1st June if they don't get paid can they walk away

1:08	Comment From Mark  Why did Craig White insist on Duff and Phelps? And has White used Duff and Phelps in the past in terms of taking companies into liquidation? Thanks
1:08	mlmsolutions:  Hi Frank, that is our understanding too.

1:10	mlmsolutions:  A huge thanks to everyone so far that has contributed. We are now half way through the event. We have had tons of questions and will try to answer them all.
1:10	Comment From Barry  Could you possibly clarify what Bill miller means when he talks about" not a full liquidation but partial" most of us are flummoxed by this. Thanks

1:13

mlmsolutions:  Hi Mark. Duff and Phelps cover this in their report issued on 5 April. In the run up to his takeover of Rangers, Craig Whyte instructed Menzies Corporate Restructuring (MCR) to advise him. MCR was taken over by D&P late last year. So I guess, Whyte wanted to stick with an adviser he trusted. That said, it might be thought that there were conflict issues there since an administrator has to act in the interests of creditors as a whole. D&P had to convince the court that they were suitably objective and independent before the court appointed them. Not sure who Craig Whyte used in previous cases but we'll take a look after this event. Leave a message on our facebook or blog and we'll get back to you

1:13

Comment From mark  can / do hmrc agree to cva`s and why would they. would this then not be `open door season`?

1:15

mlmsolutions:  Hi Mark - yes, HMRC do agree to CVAs although they often have quite onerous conditions. From their point of view, they are often one of the biggest creditors and they have to strike a balance between the interests of the company and the interest of the taxpayers. It's not in their interest to agree to a CVA if it looks like the company will simply run up another tax bill. Also not fair to everyone who pays tax as they go along

1:15

Comment From Richard  In your opinion, have Duff and Phelps been admirable administrators? They seem to be making it up as they go along

1:17	mlmsolutions:  Hi Richard - sensing some frustration here! Have a look at our earlier response to Steve - posted at 1.03
1:17	Comment From Mcfee  If ticketus have a floating charge on property ie ibrox park, can they force liquidation and cash in on it?

1:17

mlmsolutions:  Hi Barry, you've got me excited because this is a real isoteric question. I understand that Miller is proposing to purchase the business and assets from the Administrators as a going concern - an Administration sale. However, the way insolvency legislation is framed, Administrators do not have the ability to pay a dividend to unsecured creditors. Administrators are expected to convert the Administration into a Creditors Voluntary Liquidation, then pay whatever money is left out to unsecured creditors. At that time, the Limited Company RFC plc would be in liquidation, then it would be subsequently dissolved. Hope this helps, but I did warn you!

1:19

mlmsolutions:  Hi McFee - there is no evidence that Ticketus have any kind of security over Ibrox or any other of the assets of Rangers. They tried to create a kind of security over certain seats if you like - in the opinion of Lord Hodge, the type of security they tried to create was invalid in Scots law

1:19	Comment From IainM  Can a CVA or liquidation be completed before the FTT result is announced?
1:20	Comment From Johnny  How long do you think Rangers have left before liquidation is inevitable?

1:20	mlmsolutions:  Hi Johnny - we posted a response to a similar question at 12.59 -
1:21	Comment From Bernard  Not at all. Clearly, HMRC are not always consistent in how they treat larger companies. Vodafone for example.

1:21	mlmsolutions:  Excellent point Bernard!
1:21	Comment From Daniel  Does a significant loss in teh 'Big Tax Case' render all negotiaions re the current accepted debt irrelevant?

1:22	Comment From Alec  Is there a deadline when D+P have to report back to the court if no buyer or CVA is agreed and if so what would happen next?
1:25	mlmsolutions:  Hi Alec. Administration lasts for 1 year but can be extended if circumstances demand it. You have to go back to court and ask for court agreement to any extension. Most administrators would take the view that, in the absence of any buyers, you would simply have to cease trading and move on to plan b - which most often is the orderly wind down of the company.

1:25

Comment From Phil  Does the amount offered in a CVA have to be greater than the value of the assests to have a chance of being approved.

1:27

mlmsolutions:  Thanks IainM. This response covers DANIEL also. A CVA can be completed before the FTT findings but that would be pointless to agree a CVA, for a further substantial liability to arise at a future date. There are clear rules on accepting contigent liabilities, but HMRC would be severely prejudiced if there is a huge liability arising from the FTT which is not dealt with in a CVA, and would certainly be challeged by HMRC. Regards Liquidation (or Administration Sale), the outcome of the FTT would have no impact here and a sale could take place before knowing the FTT outcome.

1:28

Comment From iain  are HMRC likeley to agree to a CVA?

1:30

mlmsolutions:  Hi Phil. This is an interesting point. The answer is no, not really. The realisable value of assets in a break up is often a lot less than the value in the accounts. The speed at which they need to be sold is often a consideration and relocation costs for moveable assets have an impact too. And the costs of disposal can be high. So no, the value in a CVA does not have to be greater than in a break up. The selling point for a CVA would be a faster and more certain return to creditors

1:30	Comment From Ryan  If Rangers become a 'Newco' are there laws in place that wil still essentially recognise them as Rangers - thus any financial debts / payments required of them are subsequently required of the Newco also?
1:31	mlmsolutions:  Hi Ryan - hope you're still with us! The short answer is no - debts do not transfer to newco. Are you talking about the SFA penalties?

1:31	Comment From Jack  There has been a lot of uncertainty over the Newco route and the fear the current Rangers could lose it's history. Am I right in thinking that the history and football side of things are an asset than can be purchased by the Newco?
1:34	mlmsolutions:  Hello Jack - my colleague posted a response to another questioner at 12.33 which covers this point, which is obviously a concern for fans. Basically, we think this could transfer as 'Intellectual property' or goodwill

1:34

Comment From luke  You pose the question: Why has the Duff and Phelp's Administration taken longer than expected? What are your views on this topic?

1:37

mlmsolutions:  Cheers Iain. It's unpopular view, but HMRC have a difficult job to do here, as they there to protect the taxpayer in many ways. They have clear criteria when considering CVAs, and as it stands it is highly unlikely that they will agree to a CVA. Here is their summary of their criteria -http://www.hmrc.gov.uk/helpsheets/vas-factsheet.pdf  The obvious hurdles for obtaining HMRCs agreement are - Delivering CWs shareholding Rangers recent history of non compliance (CWs era) The HMRC view improperly operated EBTs as evasion Can more be acheived via liquidation Treating all creditors the same (TicketUs, bondholders) I haven't even mentioned the probable low return being offered to creditors, which has been estimated at ranging from 3p upto 10p.

1:38

Comment From seymour  In your opinion, how low a CVA (pence in the pound) would HMRC accept

1:40

mlmsolutions:  This is interesting Luke. I actually don't know the answer. There have been lots of changes and shifting sands in the case - starting I guess with the whereabouts of the Ticketus money. But D&P did have a prior involvement in the case which they cover in section 5 of their report. They were preparing cash flows during the period of Craig Whyte's stewardship and they also advised him on restructuring options. Although the partners who advised Whyte are not the same as the partners who are acting as administrators, it might be reasonable to assume at least some level of knowledge. With that knowledge, you might have expected them to be more prepared or have some kind of contingency plan. However, as I said before, it's hard to be critical when you don't have the full picture

1:40	mlmsolutions:  Hi Seymour, please see my post of 1.37pm. It's not the most important aspect from HMRCs perspective. We have recently acheived 2 CVAs in the last few months whereby HMRC forced the proposal up from circa 35p in the £, upto an astonishing 70p in the £.
1:41	Comment From John Hibs  Given the myriad issues, what probability would you currently place on Rangers avoiding liquidation?

1:44

mlmsolutions:  Hello John. It's important to us to make a clear distinction between liquidation of the company and the survival of the club. For the avoidance of doubt, we think the club's survival is assured. As for the company, right at this moment that looks much more doubtful. And it may be that the best way forward for the supporters and players is to move forward. It would certainly be a very complex CVA

1:44

Comment From Colin  Do you think it likely that Duff and Phelps have offers to buy individual assets at this time, and is there an obligation to disclose the existence of an offer , without disclosing the quantum

1:45

mlmsolutions:  Hi everyone, the reponse has been fantastic and we have learnt loads from you all. I do hope that we have brought some clarity and experience to some of the buring issues. We will keep typing away, but there remains tons of unanswered questions. We will summarise some questions, and post further information on our website. We'd also really like your thoughts on where this has been useful for you all. Many thanks, Maureen & Allan. Anyway, back to the question........

1:47

mlmsolutions:  Hi Colin. There is nothing in the public domain to suggest that this is the case. In more general terms, an administrator would be entitled to withhold this type of information - especially in relation to quantum, if he felt that disclosing it was not in the commercial interests

1:47	Comment From Tommy  Do you think the actions to date of Duff & Phelps are normal? Is the process taking too long?
1:48	Comment From Turnberry18  That being the case, can we infer from that that Lord Hodge's 'opinion' may form some legal basis for future reference?

1:48	mlmsolutions:  You can indeed Turnberry18
1:48	Comment From Vidmar  Hello. Is it possible the Big Tax Case result could be kept confidential, with any penalty incurred being pre-agreed at a pence in the pound level, payable over a set period of time?

1:50	mlmsolutions:  Hi Vidmar - I don't think the case result could be kept confidential. The findings of the FTT will help inform how similar cases (and there are many) will be handled in future. Settlement terms could be though
1:50	Comment From Charlie  In your opinion has Craig Whyte done anything illegal in this wole process?

1:52

mlmsolutions:  Hi Tommy. I don't think the present circumstances can be termed as normal. If fact, this must be the most dramatic Insolvency we have seen ever! On a personal level, they are operating in difficult circumstances, and their actions are under the most incredible limelight. It appears to be a reputationally "high risks" decision they have taken to get involved, and they will only really be judged once the outcome is know. The level of scutiny they are under comes with the territory.

1:53

Comment From Ian  Say a CVA is achieved, 3 weeks later we find out the big tax case has gone against us, what are the down falls ie back into admin liquidation etc

1:53	mlmsolutions:  The administrators will carry out an investigation into the conduct of Craig Whyte and others who have been directors in the 3 years prior to administration. They will have access to company records which will help them reach a conclusion. They will submit a report to the Insolvency Service who will decide whether action should be taken against them.
1:54	Comment From Guest  Can any shareholder(s) take action to remove Craig Whyte's shares from him

1:55	mlmsolutions:  Hi Ian, Rangers would be back to square one. It would be a failed CVA, and back into Admin or possibly straight to liquidation.
1:55	Comment From James  In liquidation. Who determines the asset value? Does the asset get valued by the administrator. Example; Ibrox Stadium. Lets who values and whats to stop saying the fans attempting to purchase or outbid a prospective other?

1:56	mlmsolutions:  Hi James, the Administrators will already have had all the assets valued by independent valuators. But those are just valuations. The market decides - only worth what someone is willing to pay...........................
1:57	Comment From Batz  Hi - can you confirm the situation wrt Whyte's shares - can the admins/courts of session compel him to sell or take the shares from him? Thanks.

1:57

mlmsolutions:  Good question from this Guest. There are lots of protections available to minority shareholders but I know of nothing to force a majority shareholder to sell. In private companies, there are often Shareholder agreements which regulate conduct among shareholders. These would contain provisions allowing for expulsion etc for, for example, bringing the company into disrepute or for lacking capacity to act etc. However RFC is a public company and unless there is some provision in its articles of association, it's hard to see how he could be forced to sell.

1:58

Comment From Joeraith  If RFC have assets of £100m,and debts of £134,why dont the administators just sell the assets to pay the creditors ?

1:58

mlmsolutions:  Hi Batz, See response at 1.57pm.

1:58

Comment From Richard  The Issue with season tickets is even more complicated as many pay using Credit Cards and if not fulfilled the CC compnay is liable and would be requesting a Bond/Credit insurance against Rangers (i believe this was investigated by one CC compnay a number of months ago) and the CC compnay would be liable for the whole purchase price even if 10 games had already been played using the new season ticket....disaster for Credit card co

2:00	mlmsolutions:  Richard, that is a great question. It is complex and I will post a response on our website, or as a q&a on our next blog.
2:01	Comment From Glen  Has the idea of an "incubator company" been used before in the UK?

2:01

mlmsolutions:  Hi Glen, It has, but our terminology would be a Hive Down. Get googling!

2:03

mlmsolutions:  Joeraith - Administrators have to act in the best interests of creditors generally. D&P have a resolution in their report (Resolution 17.1.9) which says that if they reach the point where is looks like no better realisations will be achieved in administration than would be achieved in a winding up, then they will take steps to move to liquidation. But it is highly unlikely that the book value of the assets would be achieved in a break up sale for all the reasons I gave earlier. And the claims would be much higher. the administrators will no doubt be keeping the situation under review.

2:05	Comment From Tempo Rary  Is it possible to transfer assets and operate a newco without a CVA having been agreed by liquidated company?
2:06	mlmsolutions:  To keep up with all the latest news on the current situation at Rangers and any further developments please follow us on Twitter @mlmsolutionsuk and on Facebookhttps://www.facebook.com/mlmsolutionsuk

2:06	mlmsolutions:  Tempo Rary - short answer is yes. Sale of the business and assets of a company in administration is a fairly normal process and does not need a CVA to be in place
2:07	Comment From Craig  Hi Maureen, where does Craig Whyte sit within all of this? What are his legal powers, if any?

2:09

mlmsolutions:  Hi Craig - as we've said above, I don't know of any easy or obvious way to force a majority shareholder in a public company to sell his shares. Some kind of negotiated settlement might be possible. There is also the issue of the assigment of the old HBOS charges

2:09

mlmsolutions:  Hi everyone, the response has been incredible and we have been typing furiously for the last two hours. The session is now at an end. There are many unposted and unanswered questions, but we will come back to all of them. We really appreciate all your input. Look out for the next one, and we would really appreciate any feedback you have. Best wishes, Maureen & Allan   Edit   Delete Entry