Rangers have nothing to worry about

Rangers’ previous board, and its new owner, made much of the expert legal opinion they have received assuring them that they would win their appeal against the £24m underpayment, £12m interest, and £18m penalty assessments from HMRC.  For almost a year, Alastair Johnston deflected and denied, but beginning on 1 April of this year, he began to signal that things were less certain for Rangers.  Once Craig Whyte had secured funding for his takeover (from sources unknown), Johnston and other directors began to sound the alarm about the consequences of Rangers’ new owner being unable to pay these bills.  Craig Whyte’s retort, and only comment on the tax case, was to dismiss the possibility of losing the case based upon the legal advice received.

In a previous blog post, we discussed the source of Rangers’ original legal advice on Employee Benefit Trusts (EBTs), Paul Baxendale-Walker.  We showed that Mr. Baxendale-Walker is a colourful character who runs one of Britain’s largest pornography production firms.  More relevant is the fact that Baxendale-Walker has been struck off by The Law Society of England and Wales: he lost his ability to practice law related to malpractice involving a company that used one of Baxendale-Walker’s EBTs to loot its own pension fund.  (Baxendale-Walker gave a character reference to a bank for a “person” who did not in fact exist).

Mr. Baxendale-Walker is an ebullient chap and not someone to take such a professional insult lying down.  When you have one of the greatest legal minds in history, it would surely be a waste of your genius to allow lesser mortals to deprive the world of your brilliance.  So Baxendale-Walker launched his counter offensive.  He took The Law Society, Deloitte & Touche (the accounting firm), and several individuals who were involved in the case against him to court.  The outcome can be found here: http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/QB/2011/998.html&query=Taylor&method=boolean

The link above provides more details than most would care to read, but the short version is that his claims were dismissed as being without foundation.  For those with an hour to spare, the link is worth a read.  It is like a plot from a bad spy novel.  The number of judges who seem to find that Baxendale-Walker’s statements lack credibility is quite remarkable.  In the face of rules that prevent lawyers from paying commissions to those to find clients for his EBT schemes, Paul Baxendale-Walker appears to have just formed a company that was held in trust, but acting on his behalf, to get around the restrictions.  The courts looked through this device and saw it for what it was: a sham.  Most bizarrely, Baxendale-Walker took to pretexting.  He pretended to be an HMRC investigator in emails and phone conversations with those who were ‘persecuting’ him to try to get them to make damaging admissions.  (According to the court papers, pretending to be a representative of HMRC is possibly a crime in itself).  A sound recording expert witness gave testimony that at least one of the conversations taped by Baxendale-Walker had been deliberately altered.  However, the important bit is the outcome.  Eight of the nine defendants sought to get a dismissal.  On reviewing the evidence in the case, The Honourable Mr Justice Supperstone found in their favour and dismissed the case against them on a number of grounds, but principally “The claims against each of these Defendants should be struck out on the basis that they have no real prospect of success”.

Rangers have never specified who is giving them this advice; that there is no risk of having to pay anything on the tax assessments.  While Baxendale-Walker’s co-author on a book on EBTs, Rangers’ own counsel in the current tribunal process, Andrew Thornhill QC is also known to be gregarious character never afflicted with self-doubt, Baxendale-Walker admitted last year (in an interview with Phil MacGiolla Bhain) that he had recently completed some work for Rangers.  (I hope that this was general consulting work and that he was not giving legal advice, as he is not authorised to do so).  It is just an educated guess, but I suspect that Baxendale-Walker will prove to be the “expert legal opinion” on which Rangers are using as the tissue behind which they can hide their admissions of the risks the club really faces.

Anyone taking the time to read the court papers in the Baxendale-Walker case will gain a detailed insight into precarious legal status of EBTs, the findings against those who have been blatantly misusing them, and the value to place on expressions of confidence from Paul Baxendale-Walker on a favourable outcome.

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 for what was (updated) one of the largest football clubs in Britain.

301 Responses to Rangers have nothing to worry about

  1. Frank's Boy says:

    I very much agree with Barry’s and Boab’s recent posts re the announcement to the shareholders on Monday 6th. I’m anticipating an informational anti-climax. Whyte and his team (Hay McKerron, Noble Grossart et al) will be well versed in the de minimis requirements of such a document. A great deal of their effort will focus on the selection of ambiguous language, an inverted precision of sorts, which will allow them the necessary latitude to straddle the line between obfuscation and untruth. That is what Whyte will demand of them; that is his modus operandi. The deferment of the announcement is, in itself, a manifestation of this, as will be the extended accounting periods. The fact that we now have two “Rangers” is another. Every dodge, legal at the letter of the law rather than at the substance, will be employed.

    At a simple level, all investors are opportunists; but investors in football, or even rugby clubs, are not people of cold logic but of passion, narcissism, BillyBigTime-ism, and the odd bona fide mentality. Whyte, from what we know of his activities on this site, is … an opportunist, who appears to utilise every nook and crannie of corporate law.

    Paradoxically, he is in the forefront of a significant cultural event in Scotland and appears to have difficulty, from what we have seen and heard of him, “fronting” this. Why would he want to do this ? (In any other country perhaps his motivations would come under even a little scrutiny.)

    Monday, perhaps, will provide a great number of questions than answers. And I sincerely hope I’m wrong.

  2. paul says:

    No denial from James Mortimer that he is Craig Whyte’s backer


  3. paul says:

    sorry please delete – I see this has already been discussed

  4. Lord Wobbly says:

    a bit late Paul. Take the time to catch up on the posts next time. How’s that FAQ section coming along RTC?

  5. tomtom says:

    Poor taste!

  6. tomtom says:

    I’ll vote for that.

  7. John says:

    Could the following have anything to do with the £18m to buy Ranger’s debt?

    14 April 11
    The Board of MHG [Merchant ~House Group] is pleased to announce the launch of the Merchant Gemini Turnaround Fund (the “Fund”), a new corporate turnaround fund which is seeking to raise up to £50m. The Fund will be raised by Merchant Financial Funds ICC (“MFF”), an incorporate cell company domiciled in Jersey. MFF is owned as to 50% by MHG and 50% by Jordasic Investment Holdings Limited (“JIHL”), an investment management company based in Jersey. The boards of MFF and the Fund will comprise James Holmes, Chairman of MHG, and John Whittle and Michael McKean, who are based in the Channel Islands.
    Merchant Capital Limited (“MCL”), a wholly owned subsidiary of MHG which specialises in corporate turnaround activities including providing turnaround funding and advice, has been appointed as the investment manager of MFF. MCL will receive an annual management fee equal to 2% of the funds under management in MFF and 20% of the annual net capital gain in the value of the fund after all costs.
    MFF will establish an advisory board and has agreed to appoint Craig Whyte, the founder and chief executive of Liberty Capital, and David Roberts, CEO of Trimite Group. Messrs Whyte and Roberts are both respected turnaround specialists with over thirty successful transactions between them.
    James Holmes said:
    “This is a significant development in the strategy of the Group. The Merchant Gemini Turnaround Fund is a natural expansion of our existing corporate turnaround activities currently conducted through Merchant Turnaround plc and Merchant Corporate Recovery plc, which will in turn benefit from the Fund’s own projects. The combined experience of our advisory board will make a difference to the many companies that are struggling to secure finance from traditional sources. At the same time, we will be providing an excellent investment opportunity to investors prepared to take a longer-term view.”
    David Roberts added:
    “I am delighted to be working with Gemini and the Merchant House Group. I really think our combined experience will make a difference in these difficult times for so many companies whilst providing an excellent investment opportunity to investors prepared to benefit from a longer-term view.”

  8. gorillainaroom says:

    Thank you TT. You shall have the kingdom of heaven for your reward!

  9. fergus says:

    Does this mean the ragers are now indebted to a company who is attracting investors with promises of a steady return that is better than the banks .
    or is this a last ditch attempt to attract any mugs out there to spread the loss .
    makes life exciting

  10. Mark Dickson says:

    yes there are TWELVE teams in the SPL not just TWO altho most of the time you wouldn’t think so…..anyway every one of the 11 other teams who play Rangers have their own hopes and aspirations every season, every fan has their own hopes and wishes for their team, the strength of Rangers and the results and points the other teams can win or lose against RFC all contribute towards those end plus of course enduring rivalries and avenging previous results or wrongs etc etc

  11. Henry Clarson says:

    As this blog continues to prove, tax law has never been more interesting!
    One of the things that intrigues me most about this entire business is the supine attitude of the media. I can well understand why the Traynors, Youngs and Leckies have no desire to rock the boat – they are, after all, just professional Rangers cheerleaders, puppets and poodles.

    What I don’t get is why business journalists and “proper” news correspondents aren’t interested. Lest we forget, the
    majority of the Scottish people don’t give a damn about football and even fewer think it’s more important than their own business affairs. I would have thought that people from the business community who take the Herald or the Scotsman do so because they expect to kept informed about matters that could affect their own professional affairs. This case seems to me to be a significant story in its own right, not because it concerns a football club but because it concerns income tax issues, employee benefits, law and accountancy in the affairs of a prominent business with an eight-figure turnover. Nothing to see here? Shome mishtake, shurely?

    Regardless of what that company is trading in, surely a “creative” approach to paying employees – and the potential pitfalls thereof – would be of reasonable interest to business men and women who have never watched a football match in their lives?
    Is there really no story in the distinct possibility of a 138-year old, multi-million pound, Scottish company going into administration or liquidation in the near future?
    Are these matters really of no significance at all to the columnists and journalists of the business pages or to their readership?

    How has the Foe Malign managed to gag well-informed commentators who have reasonable qualifications in business law and accountancy and are very well able to understand the issues at stake? What benefits do the broadsheets’ business editors gain from pretending that there’s nothing to report here?
    Despite my utter contempt for the mainstream media, I am genuinely puzzled that the potential for a spectacular collapse of an internationally famous business can apparently be ignored by every serious journalist in the country.

  12. No evidence that the formation of this fund is connected to the Rangers takeover. It is worth noting that a £50m fund is tiny to the point of hardly worth bothering about. A fund of that size cannot have a diversified portfolio of stakes in public companies that are large enough to affect management performance. It is either focused on the penny-share side of things or it will not beat the performance of any index fund (but will charge 2%/20% anyway- virtually guaranteeing underperformance). Given Whyte’s history of trading in penny share stocks, one must wonder whether this fund has been created to “cash in” on the new-found fame and name recognition. Pensioners and others with a nest egg but lacking the education or experience to know how to invest it might be tempted to make an emotional investment and hand money to the man who runs their beloved football team. It is certainly unusual that a man whose PR representatives have worked hard to get the Scottish media to state his wealth as being between £700m and £1 billion would bother with taking a 50% stake in a micro-fund that will be running with (at best) assets of just £50m. Remember, that £50m is not what Whyte and his partner are contributing. Most will be planned to be raised from outside investors. That might seem like a sizeable sum to the most, but in the investment / hedge-fund world it is a rounding error. It seems like the sort of operation that would involve banks of telephone-sales stock brokers hitting up thousands of small potential investors.
    It will be interesting to see if the brokers touting the Merchant Gemini Turnaround Fund start cold-calling Rangers’ season ticket holders in the coming months.

  13. You raise some very good questions. In the course of running this blog, I have had the chance to establish an [authenticated] electronic dialog with several well known media figures and others with an interest in this situation. The usual off-the-record confidences mean that I cannot give you a definitive story with sources cited, but here is my take on the Scottish media just now.

    The laptop lapdogs of David Murray & the (almost certainly soon to be) out-going directors are in a bit of a pickle. They have not established their bona fides as sufficiently maliable that they are trusted by the Whyte team. They do not want to cross Whyte just now, but they are not stupid either. In kissing up to Murray, they would at least have had a long track record of him finding cash for Rangers by some means. In Whyte they are not so sure how far to stick their necks out.
    The “big hitters” of the old regime have been noticeably quieter than would be expected when presented with a revolution to spin.

    The rest of the mainstream media is getting battered into submission- at least that has been the Hay McKerron plan. When a guy running a journal so inauspicious as Scotzine gets “Carter Ruck”-ed by the Whyte team with threats of legal action over challenging Craig Whyte’s wealth, you can be sure that larger outlets are getting similar focus too. If you google the words: “Craig Whyte Daily Telegraph chequered business” you will find lots of links (and some copy and pasting) for an article which appears to have been pulled by the Telegraph.

    In the meantime, Whyte has the keys to the Rangers lobby. If hacks want the usual trivia about transfer targets and ready access to players lining up to repeat the usual disingenuous cliches about how much they love playing for “a big club like Rangers”, then they need to toe the party line. In the past there were issues that could be debated by the media if they choose to do so, such as Graham Speirs raising the bigotry issue. However, so long as execs, coaches, and owners received nothing but gushing praise, the hack would not be punished.

    The new regime seems to be taking a scorched earth approach to its media relations. Hay McKerron are in danger of spending the power of the Rangers lobby on goals that might prove to be a poor return. I suspect that patience in the media pack is getting sorely tested. With many troubling issues lying wide open just begging to be asked, sincere Rangers men in the media pack must be wondering what the pay-off is for adhering to the party line. In the new Whyte world, an atmosphere has been created where journalists are supposed to reprint what has been handed to them rather than ask any real questions.

    During the takeover discussion, this churnalism approach worked as no one wanted to rock the boat and burn a bridge to a man who might become Rangers owner. (Even the hapless Graham Duffy was given a platform and some publicity such was the desire to find a buyer and to avoid offending him). Now that the mundane business of sports journalism gets back to normal, if the grand promises leaked by “sources close to Whyte” do not materialise, I expect that there will be a significant backlash.

    While the Scottish media pack has steadfastly refused to do its job regarding Rangers over the last 20+ years, that will be in large part to the careful way they were courted by Murray. Whyte cannot expect the same deference to continue in the face of any failure to make good on promises and while treating the media pack with open contempt.

    Hard as it might be to believe, I think that wall could tumble and that Whyte could easily find himself on the wrong end of a sustained beating in print.

  14. Barney says:

    Great blog RTC and some really interesting contributions from many others.
    Forgive me, if this is not deemed relevant, but a poster on KDS with an excellent track record has suggested that David Goodwillie is not going to Rangers, but more liklely ,England. Maybe an indication that the 25m funds supposedly on offer from Craig Whyte will not be front ended?

  15. Slimshady says:

    Two serious business journalists on two serious Scottish newspapers that I have spoken to are seriously interested in the fate of a major 138 year old ‘iconic’ Scottish business. However I understand that their editors are less interested, and for reasons RTC has enunciated elsewhere.

    You may have noticed good coverage the Aberdeen Asset Management case in the Herald recently – one of the most interesting facts in that case (where unsurprisingly the taxpayer lost on all counts) is that the promoter is the same promoter who sold the EBT schemes to David Murray.

    That promoter went out of business in the early part of the last decade, having failed to notify its insurer of potential claims in relation to other tax schemes it was peddling. Its principals however have re-surfaced in other national firms and continue to peddle their “premier strategies” in tax avoidance, to the ultimate detriment of their clients, amongst whom are a number of other high profile Scottish businesses.

    The good news for the long term is contained here – http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ConsultationDocuments&propertyType=document&columns=1&id=HMCE_PROD1_031311 .

    This is a consultation document which will outlaw such aggressive schemes in future, by requiring anyone taking part in such a scheme to pay the ‘normal’ tax upfront and then argue the toss, or else face a hugely punitive charge later on.

    It must be hoped that this will be the final death knell for these offensive schemes, but let there be little doubt that before that bell tolls, another bell will be tolling at some length to announce the result in the Rangers’ tax case.

  16. tomtom says:

    Thanks for the edit RTC. It’s that sort of comment that attracts the morons on here.

  17. Mark says:

    RTC I have tried to google “chequered history” but every page on google is blocked, it may be because of my work security systems but I don’t think so, can someone copy and paste either the article of link where it can be viewed on here?
    This man would do well in 1980’s East Germany, probably be head of the then feared Stasi!
    Not a peep on ths dodgy character anywhere, surely he has a super injunction.

  18. Who Missed the Penalty? says:

    Respect to RTC and everyone else posting on here. Keep it coming – it’s addictive and compulsive reading. Here’s a link to the “pulled” Telegraph article.

  19. Mark Dickson says:

    Here is the pulled telegraph story http://i.imgur.com/uyldd.jpg

  20. Mark says:

    cheers MD

  21. majoc says:

    RTC 0528

    I always put the toadying down in large part to the dead hand of Media House and a chap who is a master in the black arts.

    Don’t wanna get the site into bother by naming him,but he sounds like he might come from one of Scotland’s New Towns.


  22. tomtom says:

    There’s nothing in there Mark that hasn’t been been discussed both here and on other forums. I suppose the only interesting thing is that the Telegraph felt the need to pull the story.

    Whoever has made the Telegraph pull the story could however be shooting themselves in the foot a la Ryan Giggs & Twitter. I would not expect the Telegraph to take this lying down and it would not surprise me if they are working on a “Whyte” exclusive as we speak. Revenge is a dish best served cold and all that.

    From my experience people who get too big for their boots end up falling on their face. If half of what RTC is saying about this outfit is true then they deserve everything they get.

  23. tonybananas says:

    Barry says:
    02/06/2011 at 7:45 pm
    The one thing that baffles me is Ally Mc Coist he is obviously a Rangers man through and through and adored by almost all of the Rangers fans . for him to want to be anywhere near this or even to implicate himself in what’s happening I find quite strange can anyone shed any light on why he would want to be within a million miles of Ibrox when this explodes

    Perhaps it is something to do with him being in a well remunerated job, one that given his lack of experience as a manager in his own right he’d be unlikely to secure at any other club (the same could be said for Neil Lennon).

    Fans often forget that to players, managers and coaches, that football is also a means of earning a living and human beings simply aren’t in the habit of walking away from lucrative opportunities on the basis of some rose-tinted principled stand to their own detriment.

    He is no Martin O’Neill/Walter Myth who could expect to be head-hunted for another manager’s position on equally or more lucrative terms. Simple self-interes is a powerful motive.

    Sure administration/liquidation could see McCoist’s contract ripped up, but who else is going to offer him a manager’s job at a club of similar stature and remuneration? He might as well ride it out. I would surmise that even in administration he’d be likely to keep his job.

    The only motive I could see for McCoist wanting to bail would be if he was implicated in the whole EBT issue….

  24. andycol says:

    His name is Jack Irvine, the well known founder of Media House, not Voldemort.

  25. Mark says:

    can I get someone to clear something up over this Takeover. Alistair Johnston reveal Rangers mid term accounts to have debts of towards 29 million, why is the Craig Whyte buy out getting valued at taking on lloyds debt of 18 million, has the other 11 mill been written off. sorry if this is old ground.

  26. Boab says:

    Is that your entry in the “Geek of the Week” competition.

    And I say that as a geek, in a geek rich environment.

  27. Only the bank debt was purchased by Whyte. There is a calculation of Rangers debt at 30/6/2011 that shows that the effective debt then was £28m. Currently it will be somewhere between £24 and £28m. The difference is simply money owed to non-bank creditors.

  28. Rumours directly linked to football- even if true- can be hard to explain. There are a few reasons why either Rangers or Goodwillie might not make a deal. One is certainly financial, but if that lad has any sense he will get out Scotland.

  29. MarkM says:

    thanks, so lloyds bank debt is no longer an issue as wavetower have taken that on, however the othe debt to non bank creditors is still hanging over the football club. So even with paper/ debt shuffling of the takeover there is still oustanding non creditor debt at the football club. So claims by Whyte and rangers supporters of the football club being debt free is again wholly inaccurate.

  30. Boab says:

    I think people may be getting a bit confused here because Craig Whyte, or his vehicles hold several position.

    Craig Whyte (or whoever) own Rangers, and there for both their assets and liabilities.

    However, at the same time.

    Craig Whyte (or whoever) are also owed £18m by Rangers (in my reading of the assignation).

    Craig Whyte (or whoever) appear also to have loaned the money to Wavetower now RFCG ltd, for them to buy yhr debt from Lloyds in the first place

    Maybe we should refer to him in a few ways.

    Craig Whyte (Owner) or Craig Whyte (Money Lender) or Craig Whyte (Beneficial Owner (Maybe)), depending on which particular role we are speaking about.

  31. To be clear- Rangers FC’s debt did not change as a result of the takeover. It remains at the same level as before.

  32. Barry says:


    Sorry if this has been covered previously but where exactly do HMRC stand in the list of creditors , are they next in the queue after Wavetower/RFCG get there 18m or do they have to wait in line till the 24/28m debt is cleared .

  33. Mark says:

    the reason you are all confused is because someone else has daared used the unique username “Mark.” Why is unclear, RTC do you have any details of this fake Mark I talk about?
    You will knwo which is which because he talks as if he knows about taxissues and I clearly do not!

  34. Mark says:

    the reason you are all confised is because someone else has daared used the unique username “Mark.” Why is unclear, RTC do you have any details of this fake Mark I talk about?
    You will knwo which is which because he talks as if he knows about taxissues and I clearly do not!

  35. MarkM says:

    sorry my mistake, i changed my user to MarkM

  36. MarkM says:

    the difference is i type the way yoda talks but without the wisdom

  37. Fittaeprint says:


    Excellent blog, compelling stuff! I’m not surprised at the lack of Scottish pressaction in relation to either the takeover or the background of the new owner/board. For years myself and many other fans have seen an institutional bias in the media, this bias is best described as reporting anything to do with SDM as positive, (the numerous stories over the years about ‘…a major investment is iminent..’ which usually appeared around early Jan, whereas the bunnet was treated like a pariah who was only in it for what he could get.

    I am baffled, however, by the belief that the tax case worst scenario of £50M+ will pose any difficulties to DW, given the vast sums SDM borrowed over the years, he’ll simply reclaim the mis-sold PPI, bingo!
    Keep up the good work, THE TRUTH IS OUT THERE

  38. Mark says:

    comment on tax would I give hmmmm?!

  39. majoc says:

    ANDY COLL 1141

    That is the very man,probably or even possibly or not.

    I believe he was lampooned and satirised mercilessly by a St Mirren supporting novelist.

    Entertaining read,and perhaps prescient in a number of ways!

    Not that I’ve read it,so I cannot pass comment………

  40. Unsecured creditor. They will not get a penny until statutory payments to employees, legal costs for administration itself, secured creditors (Whyte’s firm), and then preferred creditors (likely leasing firms and other financial firms) get paid 100% first. (employee payouts are capped and quite small, but all of that must be paid)

    HMRC are in the same class as holders of The Rangers Bond (which paid for the Club Deck), and misc. trade creditors like plumbers, builders, etc.

    How HMRC deals with the likelihood that they will receive nothing is the key to what will happen to Rangers.

  41. ChrisMcC says:

    Well, I laughed, Mark. :o)

    RTC and Don Dionisio both mentioned ‘geekery’ but Star Wars references surely takes it to a whole new level?

    Having said that, Yoda isn’t the first Star Wars character mentioned here. Was there not something about the guy who wrote about ‘succulent lamb’ earlier …

  42. Barry says:

    Thanks , eagerly awaiting the next instalment

  43. Tam S says:

    Do you not think we’re confused enough without this being thrown in!!! 

  44. monster_mind says:

    “It is certainly unusual that a man whose PR representatives have worked hard to get the Scottish media to state his wealth as being between £700m and £1 billion would bother with taking a 50% stake in a micro-fund that will be running with (at best) assets of just £50m.”

    Agreed, but then when we look at the Merchant Capital Recovery Fund (a tiny £3m fund.)

    MCR is part of Merchant Turnaround, which itself is part of Merchant House. MCR was set up in 2009, with funds of just £3m, so it’s a relatively tiny enterprise. I’d speculate that funds of this amount probably came from small private investors (perhaps Pritchard’s stockbrokers, part of Merchant House Group PLC, recommended it as an investment?)

    So £3m has been raised to be invested in failing or cash-strapped businesses. MCR can draw on the experience of “turnaround specialist” Craig Whyte. Here’s one example of how they fared:

    LM Logistic Group Ltd.

    2009. LM Logistics and Syntex are two small sister firms based in Lowestoft. To simplify what they do, one firm is essentially a warehousing/ storage operation, the other distributes the goods from the warehouse. They rely on each other. The firms have cash flow problems and are struggling to pay creditors and continue trading. They are put in touch with MCR. They may have been introduced through a company called Primary Asset Finance, who specialise in arranging funding for struggling businesses. Primary Asset Finance don’t seem to be part of Merchant House Group, but they are registered at the same address. Phil Betts is a director.) Primary Asset Finance certainly seems to have claimed some involvement.

    Anyway, MCR decide to indirectly invest in the sister companies. There are strings attached to the money on offer – unsecured creditors have to agree to accept pence in the pound under a CVA.

    18/11/2009. Details of a CVA were lodged with Companies House. Unsecured creditors of LM Logistics/Syntex accept 27p in the £. Several staff are laid off, and the remainder agree to an 8% pay cut. So MCR agree to invest other people’s money in the two sister companies.

    22/10/2009. A new company is set up – LM Logistics Group Ltd.

    23 and 24/11/2009. Five directors are appointed, including Craig Whyte and Phil Betts.

    25/11/2009. MCR invest £500k in LM Logistics Group – made up of £102k for 51% of LM Logistics Groups’ shares, and the remaining £398k as a secured loan. A debenture is lodged at Companies House.

    LM Logistics Group uses the money to acquire 51% of LM Logistics and 51% of Syntex. I assume the money invested paid off the unsecured creditors at the agreed rate of 27p in the £, and left a bit more as working capital.

    So at this point, MCR owns 51% of new company LM Logistics Group, which in turn holds 51% of both LM Logistics and Syntex. MCR are a secured creditor of LM Logistics Group.

    So now Craig Whyte is a director of LM Logistics Group, the parent company of LM Logistics/Syntex. Unsecured creditors have presumably been paid. Time for the turnaround specialist to work his magic?

    26/2/2010. Three months after the Whyte knight arrives on the scene, LM Logistics/Syntex goes into administration.

    14/5/10. LM Logistics Group buys LM Logistics/Syntex out of administration for the princely sum of £50k. LM Logistics Group is now the sole owner of the two former sister companies. MCR continues to hold at least 51% of LM Logistics Group. (It increased to 76% at some point.)

    6/8/10. LM Logistics Group goes into administration. A bad result for MCR, which had sunk at least one sixth of its funds into the business. At least MCR is a secured creditor, so it should recoup some, if not all, of its investment. Right?


    Sadly, MCR is no longer the primary secured creditor. To find out why, I’ll rewind on the above timeline:

    11/3/10. Two weeks after LM Logistics/Syntex go into administration, four directors, including Phil Betts and Craig Whyte, resign or have their appointments terminated. As MCR own over 50% of the company, I’m guessing they either threw in the towel or were forced out as a condition of the new rescue package

    18/3/2010. Another debenture on LM Logistics Group is lodged with Companies House, in favour of Close Invoice Finance Group. Close Ltd is now a secured creditor of LM Logistics Group. I believe they are an invoice discounter, and I assume that the debenture secures a debt owed by LM Logistics Group to Close Ltd. Given that LM Logistics/Syntex are in administration, it may be that the money raised from this financing is to put together a buyout of the two failed companies and provide some working capital.

    So LM Logistics Group now has two secured creditors, MCR and Close Invoice Financing. Which is the primary secured creditor?

    5/10/10. Two months after LM Logistics Group goes into administration, the administrators submit their proposals to Companies House. The report reveals that MCR entered into a Deed of Priority with Close Ltd, which meant that the Close Ltd debenture outranked the MCR debenture.

    The administrators go on to report that Close Ltd will probably suffer a shortfall on the monies owed to them, and MCR will get nothing.

    Way to go Craig Whyte, turnaround specialist! But more importantly, why is a supposed billionaire messing about with sub-£1m businesses?

    BTW, Countryliner Group Ltd was similarly formed (£500k of MCR money, 51% of the new holding company, director Craig Whyte.) No accounts yet to see how it’s faring, but one of the businesses in the group has been liquidated and another has lost it’s biggest contract.

  45. Goosy says:

    Re HMRC response to liquidation
    Surely HMRC can prevent liquidation being the largest creditor by far ?
    Hence the most likely scenario is how much p.a and for how many yrs will ?RFC be allowed to pay off their debt ?

  46. Adam says:

    RTC – Any chance you could send me a contact e-mail address and would you consider sticking a blog up for debate on the facts and figures of Peter Lawwells reign(looking at a direct comparison to Rangers figures profit/effective debt/pay/trophies) if i am able to write something up. Please delete this once you have read and fully understand if you dont want to given what this blog is about, but there might be an appetite for it.

    Its your ball and cool either way buddy.

  47. Adam says:

    Forget the above RTC. Can you delete when you get on as ive just opened up my email. 😉

  48. me 2 says:

    I thought that the discussion of the assignation of the “floating charge” put doubt on Whyte’s status as pref creditor, or did I read that wrong

  49. Henry Clarson says:

    Thanks to RTC and slimshady for the replies.

    It appears then that some of the media footsoldiers would like to have a sniff at this stinking pile of poo but they are being kept on a short leash by their editors (and possibly the in-house lawyers.)
    That also ties in with some of the noticeably outrageous BBC coverage too. The BBC website and its Ceefax service were the very last to withdraw the ludicrous non-story that Neil Lennon was in danger of being charged for racially abusing a Rangers player or two during the league match between the cup-ties. While every other outlet which had run with that preposterous rumour withdrew it by lunch-time the same day, the Beeb mysteriously continued to feature it until the next day, long after explicit statements to refute the allegations had promptly been issued on behalf of the Rangers staff who were supposed to have been the targets.
    I’ve received private messages which allege that the writers of Ceefax pages were uttery baffled by orders from higher up, telling them NOT to update the Lennon story. These senior figures were, apparently, well above the level that the local editors were used to dealing with.
    I still can’t see what’s in it for non-football editors and journos to dance to the Rangers playlist at the expense of their reputation. Clearly, reputation is not that much of a consideration for the tabloids. But the BBC and the broadsheets? Very strange.

  50. Henry Clarson says:

    In other words, after years of expensive and tedious investigation they should send out a signal that if you set up an unlawful tax avoidance scheme and dodge paying tax for years and years and years, the Taxman will give you even more time to get around to eventually stumping up some of the back payments?
    I think that might be a less than likely possibility

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