19/06/2011 731 Comments
Yesterday, Darrell King published his much “Heralded” interview with Rangers’ owner, Craig Whyte. Strangely devoid of quotes, King appears to be paraphrasing Whyte’s words. Quite what Whyte is afraid of is not clear, but that does not matter much. What did strike me as important is following paragraph:
“Contrary to a report elsewhere this week, no form has been signed that would allow season-ticket money to be used as a guarantee against any future loans; indeed, the form lodged at Companies House by RFCG last month does the opposite: it prevents season-ticket money from being used for that purpose.“
(Darrell: if you are reading this, you made a mistake. The MG05s was actually filed by The Rangers Football Club plc, the football club, and not its parent company, The Rangers FC Group Ltd). Readers of this blog will recall the MG05s filed by Rangers at Companies House on the 26th of May. This document created no small measure of debate and confusion. Taken literally, this document said that all of Rangers assets had been released from the protection of the floating-charge except the “Released Assets”. The “Released Assets” were defined as the proceeds from 100,339 season ticket sales over the next four years (averaging 25,000 per season). The bizarre wording of the document struck readers of this blog at the time and we debated this subject at length: what did it mean? Everything is released from the charge except the Released Assets? It sounds illogical.
Of course, it is not illogical in law if you provide a definition of “Released Assets”. Everything is released except (whatever we say is not released, even if we call the items not to be released “Released Assets”!) It starts to make sense if you think about it. However, this interpretation seemed a bit contorted. Why would Whyte release all of Rangers’ assets except a very specific number of tickets from the protection of the floating charge?
A recap on floating charges and insolvency law:
When a bank (or other lender) provides a loan to a business, it will secure its own interests by attaching either a fixed-charge or a floating-charge on the assets of the business. In a fixed-charge, specific assets are named and the bank could just take possession of these assets in the event of a failure to repay the loan or interest on schedule. With a floating-charge, assets covered by the “charge” would be sold until it has been repaid in full. In Scotland, holders of floating-charges that pre-date 15th September 2003, have some additional rights in insolvency of great relevance to Rangers and the tax case. Holders of such floating-charges are able to call for the appointment of a Receiver, responsible only to themselves who can sell off the secured assets to a new company. Rangers’ debt to Lloyds Banking Group (Bank of Scotland) was secured by a floating charge dating back to 1999, and therefore covered by the old receivership laws.
By purchasing this debt from Lloyds, all of the contractual privileges survive. Whyte had the option of simply telling HMRC where to go if Rangers lost the tax case and buying all of Rangers’ assets worth keeping. This would be a really clever use of law. (I will leave others to pontificate over the ethics and morality of such actions, but I was impressed by the ‘checkmate’ nature of the manouvre).
The apparent release of all of the assets (except the proceeds from 100,339 season ticket sales) made no sense. So, we speculated that what in fact was intended was the opposite: that the MG05s was just a mangled document that would be corrected. That all of the assets remained protected by the floating-charge and that the tickets had been released from the floating charge for some other reason- presumably to finance a loan? That the same Bristol-based firm that filed previous MG05s for Ticketus had prepared this document for Rangers does seem to add weight to this argument. (The Daily Record seems to have read this blog and decided that this was in fact the case. At least they did for a couple of hours until Whyte’s PR goons had the article pulled).
However, if Darrell King’s article accurately portrays Whyte’s words and understanding of the MG05s filing, he appears to have given up his greatest defence in the event of losing the tax case. So the mysteries surrounding Mr. Whyte continue.
Scenarios that could explain this situation:
A) Screw-up: Has a lawyer simply made a “balls-up”? It does happen more than many would believe. Are Rangers assets no longer protected from the tax man?
B) More deception: The absence of quotes from King’s article on Saturday could be significant: to make the article deniable later?
C) Other: I will be interested to hear other hypotheses for this strange set of facts.
Mr. Whyte’s thoughts on this blog:
In his interview with Scotland on Sunday published today, Whyte is asked about this blog:
“I’m aware of a website that has dedicated itself to talking about our tax
case,” said Whyte of a site that claims to be in the know about Rangers’
financial affairs and regularly predicts a new kind of Armageddon for the club.
“I’ve looked at it. What they’re saying is 99 per cent crap”
Care to comment on the 1% truth Mr. Whyte? If 99% is so “crap”, it should be easy to pick examples?
Then there was this quote: “The tribunal only starts in November so it will likely be concluded around March-time. Of course, there will probably be a series of appeals after that. This could go on for years yet.”
Dear oh dear, Mr. Whyte! You have a mountain of correspondence on your desk that tells you that this is not true. The First Tier Tribunal (Rangers’ appeal against tax assessments received months earlier) started in October 2010. It adjourned after two weeks. It restarted in April 2011 and after three more weeks, it still could not be concluded. So, Rangers outstanding tax issues have been scheduled for November 2011.
Perhaps Mr. Whyte could do better by the supporters of his club by making full disclosures that actually make sense. Nothing would remove the cloud of suspicion and innuendo from his period as Rangers’ owner faster than coherent statements that tell us how he will deal with an adverse outcome from the tax case. I would think that anyone who can say so much but avoid making any sensible comment on the single biggest threat affecting his club is the one who is uttering “99 per cent crap”.