Borrow Borrow

The revelation that Craig Whyte’s Rangers is selling off more of the family silver to stay in business just a while longer answers a few questions about this puzzling situation.  It is now abundantly clear that Whyte’s tardiness in paying creditors is more than just a bad habit.  It is also clear that there are no vast pools of wealth on which Whyte can draw to keep Rangers on life support.

For those of us who have indulged in reading entrails to try to understand Whyte’s actions, it is becoming ever more clear that there is no plan.  Any semblance of a grand design evaporated into the Scandanavian air on 3 August when Rangers failed to qualify for the group stages of the Champions’ League.  Even the booby-prize of Europa League qualification would not have come close to filling the chasm in Rangers finances that opened that night.

With records released on the Companies House website confirming that Rangers have given a fixed charge security over their assets to an English finance company called Close Brothers, it is clear that Whyte is selling the family silver in return for delaying insolvency.  The news that Rangers came within a few hours of having a winding up petition approved against them yesterday is quite remarkable.  That Whyte has had to resort to the desperate end of the corporate finance spectrum shows how close to the edge things have become.

We do not know how much has been borrowed.  Therefore, we do not know if this was just a small amount of funding that keeps the wolf from the door for a few weeks or whether he has established the line of funding that will see Rangers through to the opening of the transfer window in December.  If Whyte’s negotiation tactics have improved since the summer, he might not over-price his sellable players again.  He might even attract an actual offer for Jelavic this time.  To ignore the transfer window and fund Rangers through to the First Tier Tribunal (Tax) returns its findings (possibly as late as March 2012), Whyte would need to have borrowed about £15m.  Only at this time could Whyte legitimately claim that insolvency was caused by the legacy tax issues rather than his inability to run Rangers.

Borrowing against Rangers’ assets now not only reduces Whyte’s prospects of making a profit on Rangers (as faint as they were), but this greatly complicates any insolvency filing.  The odds of a Rangers liquidation and a disorderly meltdown in insolvency have now risen from the fanciful hopes of dreaming Celtic supporters to something that needs to be given serious consideration.

Whyte seems to be either holding out hope of Rangers getting an against-the-odds result in its dispute with HMRC or is trapped in the ‘bargaining’ phase of grief: trading all he has for more time.  Until now, Whyte-watchers had to consider the possibility that the Motherwell-born-billionaire had a plan that would outfox everyone.  It looks increasingly clear that he has just been making it up as he is going along since the Malmo game.

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.

713 Responses to Borrow Borrow

  1. StevieBC says:

    RTC, would you concur we have reached saturation point again with the comments…

    We need another Post to feed on !

    In the absence of anything more relevant – how about indulging us by posting some “alleged” stories about Sir Minty which the MSM suppressed ? There must be lots of stories over the years…?

    …or post them after “the main event” ?

  2. Mark Dickson says:

    It’s hard I know but forget it’s Rangers FC for a moment and think about this from a purely venture/vulture capitalist perspective;

    Company X for whatever reason is tending towards an insolvency event. Like any business they have assets, some useful and of genuine value and others less so, they also have an income stream.

    Liberty Capital (C.Whyte) or one of it’s subsidiaries invests in the company at a very distressed share price maybe even as low as £1.00
    They also offer to help with the company debts & financing requirements and speak to Company X banker about the existing loan which they take over giving them a floating charge & secured creditor status. They advance a further amount of money although not a huge amount but still covered by their secured creditor status. In the event of any insolvency of the company then Liberty as a secured & preferred creditor can seek to recover the full amount of their loan plus have a reasonable retrospective interest rate applied.

    Despite their best efforts (ahem) the company still seems to be holed beneath the water-line and sinking fast and in need of further additional capital and Liberty seek funds from their friendly associates at Close Leasing who will also advance funds albeit at quite a high commercial cost and also at secured and priority creditor status.

    As was always a likely probability to happen anyway the game is a bogey and sooner or later the company experiences an insolvency event. A receiver / administrator / liquidator is called in to sort out the company affairs and deal with creditors claims.

    Close Leasing are the highest ranking creditor and they can demand assets are sold or exchanged in lieu of their debt (including full interest entitlement + any penalty charges). There are sufficient assets to realise their debt recovery in full including their interest(profit) element.

    Liberty are next in line and they to demand assets are sold or exchanged in lieu of their debt (including a retrospectively applied interest rate and any fees or costs etc). There is just about sufficient assets to realise their debt recovery in full including their interest/profit element.

    Oh dear there seems to be very little left if anything for the ordinary creditors nevermind the shareholders but perhaps a CVA can be agreed or perhaps it can’t and needs to be wound up.

    Liberty & Close tried their best but the problems were simply insurmountable and the company situation was too far gone………………………

    HOWEVER perhaps the company X provided or satisfied some useful demand or function for it’s customers and perhaps there is a need for the company to continue to exist in some shape or form to satisfy the needs or demands of these on-going customers who have a strong brand loyalty.

    Perhaps a newco needs to be formed to meets these needs or IF a CVA can be agreed with the ordinary shareholders then the existing company can continue albeit with a need for either fresh investment and/or a slimmed down cost base to ensure it doesn’t simply replicate it’s previous financial problems – it will also need beneficial use of it’s previous assets and is willing to pay a rental fee or provide an ongoing income stream for the use of those formerly owned assets or perhaps new company owners or investors are willing to buy back those assets if a suitable price can be agreed?

    That is how & why Liberty & Close etc get involved with companies – doesn’t matter if it’s a warehousing & distribution company or a coach operator or a major Scottish football club. If they can provide secured money (+ interest) on the way down then they can profit from the process of company insolvency or death provided there is enough asset value to cover the amount of debt they’ve advanced and if the company still has a life expectancy post insolvency then they can start earning money again after the event if they’ve taken control of the assets required for the business to operate.

    Of course we are all football fans and are interested & concerned in the footballing aspect of it and of course some people are interested in the legal or taxation or insolvency aspect of it but if looking to understand why or what Whyte & Betts & Close are doing it’s simply a repeat of what they’ve done undeer the radar or on a smaller scale at LM Logistics etc. It’s just about sweating interest & profit out of distressed companies and their assets. That is what they do.

  3. DannyFishchargeEsq says:


    Erudite and acerbic , as is the norm with your posts .

  4. StevieBC says:

    Mark Dickson says:
    05/11/2011 at 2:29 am

    Mark, are you trying to do RTC out of a blog ?!

    Good comment/post, and yes ultimately CW – IMO – does not have any emotional attachment with RFC: he is just going to make sure he profits.

    Don’t know how CW will be viewed afterwards though.

    He should be a pariah in Scotland, [for RFC fans], but perversely he may be able to spin it that he just tried the best he could when nobody else would touch RFC with a barge pole ?

  5. Lord Wobbly says:

    Private Land says:
    05/11/2011 at 12:49 am
    Johnobhoyo says:
    04/11/2011 at 11:23 pm
    Privateland – any comments on these claims about our very own
    Kaiser, or does your moral compass take a back seat when
    matters more close to home are divulged:
    Godwin’s law alert!!! My moral compass wins again
    Private. AttenSHVN. Godwin’s Law is specific to Nazi analogies isn’t? The German Kaiser predates (and ended with) Nazism. If simply invoking ‘der Hvn’ (also predates Nazism) is sufficient to lose the argument then some contributors are really going to struggle (Ah, maybe I’ve chanced upon the thrust of the MBB comment about 99% 😀 ).

  6. Mark Dickson

    That was the most straight forward and to the point analysis of the whole CW and friends scam. RTC gave us all the platform to give our own take on it. Paulie and Mark and others have given great legal insight to the workings of this whole sorry mess that RFC are in.

    Without all of you and the great Phil Mac Giolla Bhain then we would all be in the dark as the media in Scotland have been criminaly silent on the matter.

  7. Bartin Main says:

    Gordon Smith’s been awfully quiet recently.

  8. yossery says:

    I see phil is still peddling the line that close leasing have control of all rangers assets, he really doesn’t do himself any favours at times.

  9. A bad day for the laptop loyal says:

    I suspect that Gordon Smith is in constant dialogue with the SFA/SPL about how to solve the problem of Rangers newco parachuting into the top flight of Scottish Football (whatever new format it may become).

    I see Smith as the “fixer” of the piece.

    Well, he has surely been employed to do some kind of task for the club?

  10. Lord Wobbly says:

    If only Rangers had control over all of Rangers assets….

  11. DAVE says:

    After again reading some truly great posts I find it astonishing if HMRC allow any this to happen , I also find it astonishing if the courts in this country allow CW to get away with day light robbery.

    This is so much getting played out that MSPs , judges , police , QCs and others in the legal profession are surely aware that crimes are about to be comitted and the silence is deafening.

    In my humble opinion , I believe that the law is sitting awaiting any act from people who are about to defraud the tax man , and the people of this country.

    Anything else and we truly do live in a corrupt small country and we may as well just give up because it is so blatantly obvious that something is going on

  12. Veritas says:

    I posted this yesterday afternoon but it failed to appear till late last night after waiting to be moderated. So apologies for posting it again but your thoughts are appreciated… An interesting take on the big tax case from a Gers fan. He said that HMRC should accept a payment from the club – whatever they can fairly and realistically afford – on the basis that if the revenue insist on full settlement it will force a closure and they will then get nothing. To do the latter, he added, would rob the taxpayer of at least some revenue. Does he have a point? Of course, if Whyte really wants to lose the case, as many on here believe, then this could also stymie his nefarious plan.

  13. It is quite obvious that RFC as wee know it, will, very soon cease to exist.
    It’s fans & supporters go on about Scottish Football falling to a new low if (WHEN) Rangers go into administration, Celtic need Rangers…. Rangers need Celtic bla, bla, bla is thei cry
    They just don’t get it – what RFC did was CRIMINAL, and yet they want us all to forgive & forget?

    Nice try ‘bears – when Adminstration happens, I for one would DEMAND that the other 11 SPL cubs put severe pressure on the SFA & the SPL to severely punish the newco – with much more than a paltry 10 points deduction that is the norm for clubs that have been in genuine & legitmate cash-flow problems, and have not knowingly broken the laws of the land.

    As we all know, RFC financial problems are all self inflicted. It is the Club that HMRC are persuing, not Craig Whyte, Not David Murray – so let the club fail, and the pieces fall where they may.
    Scottish Football may have to go through some very tough times – it WILL survive without Ibrox – it will have been cleansed. It will be leaner & meaner, but at least it will not have to carry the excess bagage that is RFC.

    Rather that than us support a morally corrupt sociopathic organisation that, in effect, has stolen from every one of us

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