06/04/2012 2,832 Comments
Rangers’ administrators yesterday released a communication intended to clarify the club’s financial position for creditors. It is a well written document that clearly lays out Rangers’ recent financial history in a way that does not require any financial training. Yesterday’s posts, on here and across the internet, have covered most of the detail, so I will spare you a redundantly thorough analysis.
With Rangers’ debt level potentially as high as £134m (more likely in the £95-110m range), the only hope of the club avoiding liquidation is to convince more than 75% of the creditors (by value) to accept less than the face value of their debt through a CVA. Much less. If media reports are to be believed, The Blue Knights consortium have offered just £8-10m to keep Rangers alive through a CVA. The administrators brushed over Craig Whyte’s claim to any of this money with just a casual nod to the minimum legal requirements: “the Joint Administrators will conduct an exercise to establish the validity of such security and the quantum of any monies which may be secured in this regard”. Yet Whyte claimed to Channel 4’s Alex Thomson that he is due £30m from any sale of assets. Another series of court dates looms.
In the meantime, assuming that £10m was distributed evenly among the creditors, if the final figure is, say £95m, then for every pound you are owed, you will receive 10.5p. Better than nothing? I am not sure. If Whyte’s claims are rejected, it is likely that a greater sum could be obtained in liquidation. (It has been reported that others have bid as high as £25m on the basis of an asset sale to a newco and the liquidation of The Rangers Football Club plc).
In short, it is hard to make sense of the claims that a CVA is still a viable option. In Duff & Phelps first legally binding communication, they elected to not repeat the intimations spread through the media by Rangers’ PR firm that HMRC was ready to do a deal that would save the day and that the Treasury had lent its support for such plan. Why did they miss such a golden opportunity to calm the fears of fans and other stakeholders? Is it possible that the same people who brought us Craig “billionaire” Whyte were not telling the truth?
For all of the fascinating detail provided yesterday, the reality is still that Rangers’ most likely exit from the administration process is through an asset sale to a newco and with liquidation of the existing Rangers FC. The administrators have done a fine job of trying to put ‘lipstick on a pig’ by talking about hybrid liquidation and keeping ‘the business’ going while allowing the company to die. It is their job to maximise the money raised through this process and, despite widespread grumblings from all sides, they appear to be doing a reasonable job in difficult circumstances. (Though suspicion over their motives and every move is quite understandable). In the end, reality will have to hit and all of the spin in the world will not change Rangers’ trajectory).
With 4,000 EBT cases coming along in Rangers’ wake, HMRC will surely be hoping for an example to be set that encourages most of them to settle. Doing a deal with Rangers that accepts 10% of what is owed after allowing a decade of fiddling will do little to dissuade others from appealing their cases to the bitter end. The actual amounts received from the Rangers case will likely be immaterial to HMRC’s hopes for collecting on EBT users as a class.
On a lighter note, my Monday afternoon was rudely disrupted by tweets and texts telling me that this site was down. Initial investigations seemed to confirm my worst fears that we were the recipients of a Denial of Service (DoS) attack. For the princely sum of about £3,000, hackers can be persuaded to deploy a variety of tools designed to prevent anyone from accessing a web site. After a flurry of phone calls and emails to a number of experts in this field, it turned out that we were not a chapter in a spy-thriller after all. A mis-configured host server is apparently to blame. So no James Bond action here. Just a problem that was uncovered through boring geekery,