The Devil Is In The Details


Complex legal contracts do not make for light reading.  However, within the boilerplate, information can often be found that will raise eyebrows.  The contract between Murray Holdings Limited (MHL- the MIH subsidiary used to hold Rangers’ shares) and Wavetower (the original name for The Rangers FC Group Ltd) is no different.  I am told that the Share Purchase Agreement that transferred ownership of Rangers to Craig Whyte’s Wavetower is a treasure trove of interesting details.

For example, the CONSEQUENCES OF BREACH clause states what will happen in the event of Whyte failing to make good on his many promises.

In the event of and upon the Purchaser failing at the required time to satisfy any of its obligations in accordance with Clause 6.3 above the Purchaser (or any person who has been assigned the Total Purchaser Debt pursuant to Clause 6.3) agrees that the Total Purchaser Debt is automatically released or waived or otherwise extinguished in terms to be agreed by the Company, the Purchaser and the Seller.

This means that Sir David Murray, in making good on his promise to only sell Rangers to a responsible custodian capable of taking the club forward, has included a provision that promises that Rangers £18m debt owed to Wavetower will be cleared if Whyte fails to make good on certain specific promises.  So what did Whyte promise?

The Shareholder Circular released by Whyte provided some details, but let us summarise what Clause 6.3 actually says:

  • It provides for the £18m debt to Wavetower to be extinguished 90 days after the conclusion of The (Big) Tax Case
  • It prevents Whyte from charging interest on the debt prior to the tax case being resolved (but interest can be back dated if there is an insolvency event)
  • The debt to Wavetower will be capitalised (i.e. converted to shares and the debt written down) 25 days after the completion of any reorganisation that brings the club out of insolvency’
  • Whyte will pay in all working capital promised (£5m is specified, but more detail is defined in related contract documents).

So the critical questions is:

Has Whyte paid in all of the working capital promised?

I have been told that he has not.  As part of the conclusion of the deal, Whyte’s lawyers, Collier Bristow, provided a letter confirming that they had received £5m in funds from Whyte and that it would be held for Rangers FC to draw upon.  However, it is believed that this money has not actually been transferred to Rangers.  Whyte can clear up any doubt or uncertainty with an accounting of his working capital cash flow.

Rangers fans seeking to avoid or delay the turmoil of insolvency should be asking for an unambiguous answer from Whyte that all of the working capital investment provisions of the sale agreement have been fulfilled.

If they have not been fulfilled, one man has the power to pressure Whyte: Sir David Murray.  Murray was press-ganged by Lloyds Banking Group into signing the deal, but he did insist upon the provisions outlined above.  Were they just cosmetic insertions designed to allow him to argue later that he tried to do right by Rangers?  Or did he mean them?

If Whyte has not made good on all of the provision of the contract already, Murray can threaten to invoke the CONSEQUENCES OF BREACH clause.  This would see Rangers’ debt to Wavetower eliminated and would be a strong incentive for Whyte to make good on any difference between what he has paid into Rangers and what he has promised.

Forcing the debt to be reduced to zero would remove the protection of the floating charge for Whyte.  If the debt to Wavetower is extinguished, Rangers could even have a CVA (a Company Voluntary Arrangement) where repayment to HMRC is negotiated and the legal entity which traces its founding to Flesher’s Haugh in Glasgow Green in 1872 would continue with its history intact.  The threat of a three-year ban on European competition from UEFA would also be eliminated.  If Whyte has not made good on all of his working capital promises, Murray would have a chance to provide Rangers fans with the best possible outcome from the supporters’ perspective.  The only “victim” would be someone who would have had to have reneged on promises for this plan to have legal standing.

Mr. Whyte: have you fully implemented all of the obligations of Clause 6.3 of the Share Purchase Agreement?  A simple listing of your net payments into The Rangers Football Club plc would answer the question.

Mr. Murray: if Mr. Whyte has not fulfilled all of his obligations, why have you not enforced the provisions you negotiated?  It would be the best gift you could give the fans whose club teeters on the brink today?

About rangerstaxcase
I have information on Rangers' tax case, and I will use this blog to provide the details of what Rangers FC have done, why it was illegal, and what the implications are for one of the largest football clubs in Britain.

384 Responses to The Devil Is In The Details

  1. droid says:

    Black cabs, is that not Mr Whyte’s favoured chariot?

  2. Private Land says:

    ot The Huddle Malcontent says:

    31/10/2011 at 11:00 pm

    so, lets say plan A is receiver/admin leafing to liquidation and then instead of applying for a place at the bottom of the SFL set up, what if the plan is to start at the bottom of the English league set up?

    do’able?
    ___________________________________________

    Not unless thay plan to abandon Ibrox for a public playing field in High Wycombe. FIFA rules on territorial boundaries – written i think during the 1998 World Cup – were written to keep Clydebank out of Dublin and Celtic/Rangers in Scotland, and would therefore preclude it.

    Actually these rules were designed by the SFA for the purpose of stopping Celtic’s several cheeky attempts at escape. If that mindset prevails, perhaps the authorities will be of a mind to allow Newco immeduate re-entry?

  3. Reilly1926 says:

    Adam

    If we can get Peter Lawell out and see the end of RFC = Happy days….

  4. Private Land says:

    Brogan Rogan Trevino and Hogan

    Can a judicial review be requested by members of the public, or more specifically by small shareholders of SPL clubs in the event that the SPL back bends over at an alarming angle to accommodate Rangers’ great Hump?

    And if so, is there a cost attached – and would the cost be prohibitive?

  5. Private Land says:

    Reilly1926 says:

    31/10/2011 at 11:45 pm

    Adam

    If we can get Peter Lawell out and see the end of RFC = Happy days….
    ______________________________________________________________________

    Ouch! Incoming Hugh alert :-)

  6. Interested Observer says:

    More rubbish in the DR today from Traynor. So we’re now up from 25-point deduction on Friday to 75 points over three seasons on Monday! Will it be 125 points plus no Christmas presents in tomorrow’s paper?!

    This is either throwing some lines in the water and seeing which ones get a bite or just blatant talking trash because they haven’t a clue how to cover this story properly without upsetting folk. I think I preferred it when they were ignoring it.

    By the way, the picture of the medal printed on the front page today was an example of the wrong ones! It was an SFL championship medal not an SPL championship one! Poor stuff!

    Also, this deducting points story needs to be straightened out. If Rangers go into administration, they are deducted 10 points immediately.

    If they come out of admin before the end of the season, they are good to go as per the rules. If they are in admin at the start of next season, they will have another 10 points deducted.

    Now if they are liquidated before the season’s end, their results are expunged and the SPL will continue with 11 teams (that’s what should happen. It would happen in any other league). A Rangers FC 2011 could then apply to join the Third Division next summer and they would get back in at that level.

    Let’s not be taken in by the rubbish spouted about NEWCO taking over old company in the SPL and thinking it is as easy as the SPL clubs & board just voting them in.

    If Rangers are liquidated, re-form instantly as Rangers FC 2011 and are allowed to continue in the league (even with a points penalty) it will be the greatest sporting injustice ever to have taken place in this country. Put it another way, you think a Raith Rovers would get away with something like this?

    Thought not.

  7. Private Land says:

    Adam,

    I’m not a fan of PL at all. Quite the opposite, but there really is no comparison here. Remember what RTC said about trolling :-)

  8. longtimelurker says:

    There’s a (tenuous) connection between Murray, Whyte and Lawwell with at least one of those companies listed BTW.

    Think it was the WAVERLEY one(s).

    There was something posted (CFCBlog on KDS I think) sometime ago about a mining company in Lanarkshire, something along the line of two brothers falling out and the whole thing going toes up.

  9. Private Land says:

    Paulie Walnuts says:
    31/10/2011 at 11:32 pm
    There is something strange going on. Someone has also incorporated Celtic Football Club Limited, with a registered office at what looks like a residential address in Glasgow, and with a date of incorporation of 26.10.11.
    _______________________________________________________________________

    If this has nothing to do with Celtic, the branding chiwawas at CP will be chapping their door in the wee small hours – very soon. See the trail of devastation they have left over the International Fanzine Cartel? That will be nothing to this :-)

  10. Adam says:

    PL – Its not trolling. I have a low opinion of Craig Whyte but as Paul Mc rightly points out, what else would you expect to see on a Company Director register from a guy who has never hidden the fact he deals with distressed companies.

    Ive searched a number of non-execs i deal with in a few companies as well as a few VC directors who move in the wind and their portfolio is similar to Whtye.

    The reason for puting up Lawwels is to use a comparison that anything can be made look bad.

    Oh and PL………what does PL really stand for ;-)

  11. TheBlackKnight says:

    Adam, touché, however;

    STRATHCLYDE STEVEDORING SERVICES LIMITED Dissolved (Resigned)
    CLYDEBRICK LIMITED Dissolved (Resigned)
    GRAY BROTHERS (HAULAGE CONTRACTORS) LIMITED Dissolved (Resigned)
    WAVERLEY INVESTMENT ADMINISTRATORS LIMITED Dissolved (Resigned)
    WAVERLEY INVESTMENT MANAGEMENT LIMITED Dissolved (Resigned)
    WAVERLEY ASSET MANAGEMENT LIMITED Dissolved (Resigned)
    CABERDAWN DEVELOPMENTS LIMITED Dissolved (Resigned)

    Not knowing the reason for the above closures and taking on board droids comments (and over a period twice that of the Whyte Knight) edited for accuracy!

  12. Private Land says:

    Interested Observer says:

    31/10/2011 at 11:47 pm
    ________________________________________________________________________

    The problem Traynor has is two-fold (assuming I am correct in that he has no allegaince whatsoever to Rangers);

    1. He has to sell papers to Rangers fans. The demographic arithmetic is simple. Celtic in crisis sells papers, Rangesr in crisis most assuredly do not. (I think Stunney would back me up on that one owing to family associations he has had with DR high heidyins in the past)

    2. He is an arrogant eejit who once upon a time used to be a very, very good journalist. He has sold out for career reasons, but he will not tolerate what he considers as a bunch of amateurs bettering him. Therefore he attacks this blog.

    Both points would you might think make him a sympathetic voice to Rangers fans, although judging by their reaction to what he crayoned in today’s DR, “see what thought did”?

  13. TheBlackKnight says:

    Adam on 31/10/2011 at 11:59 pm said:
    “from a guy who has never hidden the fact he deals with distressed companies.”

    I thought The Whyte Knight was a ‘self proclaimed’ turnaround specialist?

  14. Private Land says:

    Adam says:

    31/10/2011 at 11:59 pm

    The reason for puting up Lawwels is to use a comparison that anything can be made look bad.

    Oh and PL………what does PL really stand for :-)
    _____________________________________________________________________________

    The foulest and most wounding of inferences Adam. I can forgive your Rangers supporting ways – but never that!!!

    And have I ever once started a post with the word ‘Clearly’?

    Defence rests.

  15. Private Land says:

    Adam says:

    31/10/2011 at 11:59 pm

    The reason for puting up Lawwels is to use a comparison that anything can be made look bad.
    ____________________________________________________________________________

    Fair enough, and point taken.

  16. Paulie Walnuts says:
    31/10/2011 at 11:32 pm

    There is something strange going on. Someone has also incorporated Celtic Football Club Limited, with a registered office at what looks like a residential address in Glasgow, and with a date of incorporation of 26.10.11.
    ————————————————————————————–
    And also, on the same day, GLASGOW CELTIC LIMITED Company No. SC410039 incorporated at the same address in Cumbernauld as Celtic Football Club Ltd mentiooned above!

  17. Hugh McEwan says:

    Adam says:
    31/10/2011 at 11:30 pm

    Paul McConville says:
    31/10/2011 at 11:14 pm

    I have been going thru the records re CW’s companies. As has been suggested, as a venture capitalist it is not surprising that of the 32 comopanies the two Craig Thomas Whyte’s are listed as being directors of over the years, only 5 seem to be in business now without them having been dissolved or having striking off threatened for failure to lodge returns.
    _________________________________________________________________________

    Kinda saved me the bother of typing something like that out. Im sure the likes of Ian Bankier will have various dissolved businesses against his name and a quick search brings this up for Peter Lawwell which i hope people treat as being topical instead of thinking “whitabootery”

    =====================================================================

    Why would people treat it as anything other than exactly what it is.

    You use the same transparent tactic constantly. This isn’t “whataboutery” then you do just that.

    If you don’t want to do it then don’t. If you do then do. It’s just insulting everyone’s intelligence to pretend you aren’t.

    There’s no need, people are used to it. Just stop lying about it.

  18. Auldheid says:

    Private Land says:

    31/10/2011 at 11:45 pm

    There are provisions in the Celtic PLC rules to call an EGM. Not sure of the dynamics but the CST would know. Other club Trusts might have the same provision. They could work separately or together.

  19. Auldheid says:

    Paul McConville says:

    31/10/2011 at 11:02 pm

    The EBT to debt connection is a key one where the switch from EBTs (tax payers money) to debt (other peoples including taxpayers money) is clear to see in this table.

    https://docs.google.com/spreadsheet/ccc?key=0Aq2m3ggkEX2RdFU4bkRFWGRNV3ZMM0ZsTl9FUEc2UUE&hl=en_US#gid=0

    look at the drop in EBT contributions and rise in debt that takes place in 2006 and 2007 with debt accelerating until the CL money it bought in 2010 reduced it from its 2009 peak.

    BRTH’s point about recklessness and irresponsibility with the motivations that drove it cannot be dismissed and the legal consequences must be sending shivers down many a spine.

  20. Johnboy says:

    The registered address for the “new” Celtic companies is the same as that of Henson Design Ltd of Cumbernauld.
    I’m sure the directors, John and Elizabeth Henson, can explain.

  21. yossery says:

    Another day another dollar, no doubt more vitriol and bile topped up with wishful thinking and theories on the meaning of life post Rangers.
    I would think despite the calls for Celtic’s board to prepare for action that they have rather more pressing things on their mind than anything involving Rangers, well to a certain extent football excluded.

  22. stunney says:

    I thought this was worth preserving for posterity:

    http://kerrydalestreet.co.uk/single/?p=10867323&t=8596412

  23. yossery says:

    How much longer can this madness go on until it implodes, with consequences all round.

    http://www.bwfc.co.uk/staticFiles/5c/92/0,,1004~168540,00.pdf

  24. stunney says:

    Any answers available to these queries?

    http://rangerstaxcase.com/2011/10/31/devilinthedetail/comment-page-1/#comment-20869

    http://rangerstaxcase.com/2011/10/26/rangers-cash-flow/comment-page-28/#comment-20749

    Molte grazie ‘n’ ‘at.

  25. yossery says:

    I wonder if Mike Clasper Chair, HMRC has ever heard of Vodafone or Goldman Sachs to name but two, he probably doesn’t know who the deal maker Hartnett is or works against.

  26. Steve says:

    Quick question that has been bothering me…

    In administration, and in trying to achieve a CVA, would even the secured creditor have to agree to the percentage amount repayable? Or can those who have that security walk away with their repayments before the others even enter the process?

    Probably a largely irrelevant question as things probably aren’t going to pan-out that way. I’m just interested for the sake of being interested.

    Thanks guys. Still loving the blog.

  27. Mark Dickson says:

    This post below was posted on a Hearts forum where the question being debated was “would you renew your ST if Rangers were allowed to remain in the SPL?” I think it accurately reflects how most reasonable thinking fans of other clubs feel.

    =========================================================

    Ezio Auditore da Firenze, on 31 October 2011 – 05:37 PM, said:

    As a Hearts supporter I’m realistic enough to know we’re extremely unlikely to win the league & the odd cup wins are going to be pretty far apart. I’d like to think that we were at least competing on a level playing field though. Rangers have effectively bought multiple titles & cups and in doing so also deprived the other clubs in the league of prize money, better European spots also with more prize money & used the financial superiority that both of those bring to buy up talents from smaller clubs at knock down prices.

    What’s fun about that? In an ideal world we’d have a more balanced & exciting league in which all clubs had a chance to build teams with a chance to win. I can accept that Rangers are always going to be a bigger & more successful club, I can’t accept that they’re allowed to cheat as well to hammer home their advantages especially if there’s little or no come-uppance.

  28. jonny says:

    With stories that ragers are down to their last couple of quid ,I hope our board are making sure that the players wages are not being paid via a third party .
    I believe that is also against the rules but hey ho it’s the peepil we are talking about .

  29. Adam says:

    Hugh McEwan says:
    01/11/2011 at 12:22 am

    Why would people treat it as anything other than exactly what it is.

    You use the same transparent tactic constantly. This isn’t “whataboutery” then you do just that.

    If you don’t want to do it then don’t. If you do then do. It’s just insulting everyone’s intelligence to pretend you aren’t.

    There’s no need, people are used to it. Just stop lying about it.
    __________________________________________________________________

    I vociferously disagree Hugh. You have to agree that the main premise of this blog from day one is, what would consider, many educated people reading between the lines and offering up their opinions or views on whats going on.

    When any of us do that, its my opinion, that the healthiest way for the blog to remain as it is, is for others to challenge that thinking in order for everyone else to conclude how relevant the opinion is.

    In the instance of posting 15 or so dissolved companies and saying “oh oh look” i think its highly relevant, and not “whitabootery” for one of us to challenge that and show that this is not abnormal in the life of this type of character.

    I posted Peter Lawwells record. I could easily have posted a number of people i know that would show similar records.

    Just my opinion on what keeps the fire breathing in this blog.

  30. Mark Dickson says:

    The rules that applied to Airdrieonians & Gretna apply equally to Rangers. They were liquidated and expelled on liquidation and had to re-apply at the bottom level – they were unsucessful.

    Fine if the SFL vote a newco Rangers back in but there is noway they can escape being expelled and demoted IF the become liquidated.

    How can they avoid this? unless of course all existing rules are set aside.

  31. Hugh McEwan says:

    Adam says:
    01/11/2011 at 7:04 am
    Hugh McEwan says:
    01/11/2011 at 12:22 am

    Why would people treat it as anything other than exactly what it is.

    You use the same transparent tactic constantly. This isn’t “whataboutery” then you do just that.

    If you don’t want to do it then don’t. If you do then do. It’s just insulting everyone’s intelligence to pretend you aren’t.

    There’s no need, people are used to it. Just stop lying about it.
    __________________________________________________________________

    I vociferously disagree Hugh.

    —————————————————————–

    You would. It doesn’t make it any less true though. You constantly say you are not going to do it, then do it anyway. I have no issue with you indulging in whataboutery, like I said just stop lying about it.

    If you want me to insult your intelligence i can translate your original post.

    What about Peter Lawwell, here’s a list of the companies he has been involved in. He’s every bit as bad as Craig Whyte.

    Re your specious argument that you could have used any number of people to illustrate the point, you didn’t. You chose Peter Lawwell.

  32. Mark Dickson says:

    So is Peter Lawwell dodgy then or just not very good?

    Never been very impressed by him tbh.

  33. Richie_Rich says:

    RTC,
    What is going on with the date and time on the comments.

    Love the blog, one of few places to get honest info.

  34. The Mighty Quinn says:

    Onomatopoeia for the sound made by an analog clock.

Follow

Get every new post delivered to your Inbox.

Join 23,516 other followers

%d bloggers like this: