A mea culpa (of sorts) from Duff and Phelps, the Rangers administrators.

19 Mar

I am often asked my opinion on the “situation” at Rangers Football Club. I am often asked on the basis that a) I do not like Rangers (I grew up supporting DAFC, and although my extended family all supported RFC, I despised them out of spite)  and b) I am a student of the law and have a keen thing in all things Legal in Scotland.  Unfortuntely, the Scottish media has not been particularly up-front about what is really going on at Rangers. Several internet bloggers have made attempts to clarify what exactly is going on at RFC, including @grahamspiers, @pmacgiollabhan, and @rangerstaxcase) All have written extensively on the subject, and I would not begin to steal the varied and impressive work they have done so far. This blog is an attempt to make it all relatively clear to the layman. Ill try and keep it simple.

The situation is worse than the club and the administrators are letting on.

It has been widely reported that current owner and corporate takeover specialist Craig Whyte has used the money he received from the sale of season ticket books rom Ticketus to fund the takeover of the Glasgow Rangers Football Club.

To be clear, the deal can be broken down like this, in the simplest of terms.

Football financing company Ticketus physically bought 3 years of Rangers physical season ticket books from the club for a whopping £24Million. (of which £20 million was for the books, and £4million was VAT). This means the company literally owns 3 years of season tickets books. For the privilege Ticketus paid handsomely into an account, presumably into an account at Collyer Bristow, a London law firm. The deal operated like this:

Rangers gets cash in advance. When a supporter wants to purchase a season ticket book, they phone Ticketus ( or a subsidiary) and the books arrive in the post. Private estimations puts Ticketus profit on the deal to be within £30-40M.

By all accounts, Craig Whyte took this statement of  account at Collyer Bristow and showed it to Sir David Murray to prove his funds were there to facilitate the purchase of the club.

The deal likely took place as follows, “I’ll (DM) sell you the club for a £1 and you (CW) must pay off the club debt”.  The club debt was in the region of £18M and was owed to Lloyds TSB.

This seems simple enough. Except this isn’t a simple deal.

Craig Whyte  formed a company called Wavetower. Shortly afterwards, he changed the name of Wavetower to Rangers Group. The paperwork confirming this is here and here. The directors are Craig Whyte and property developer Andrew Ellis, who sit on the board of Rangers Football Club (more on this later).

It is my belief that Ticketus paid the £24 Million into the account of Wavetower/Rangers Group at Collyer Bristow. After the paperwork was signed, Rangers Group Ltd, (NOT Rangers Football Club Ltd) paid off the  £18M debt owed to Lloyds TSB.

In turn, Lloyds TSB assigned a security over the club to Rangers Group (not Rangers Football Club Ltd).

What this means is that Rangers Football Club owes £18M plus interest to Rangers Group. RFC never paid off the debt to Lloyds TSB. Rangers Group did. Afterwards, Lloyds assigned the security over RFC to Rangers Group.  Craig Whyte and Rangers Group own a floating charge over Rangers Football Club. Therefore, Craig Whyte is a secured creditor over Rangers Football Club. Rangers (Football Club) owe an additional £18M to Rangers Group (Craig Whyte).

And Duff and Phelps make a very subtle admission of this fact in a court document that was filed last week. (This was widely reported in the press as Rangers was not technically in administration)

Check out Note 3 of the Document filed in the Court of Session last week. (Available Here)

It reads as follows:

“otherwise dispenses with any further intimation, service or advertisement of this petition… blah blah blah…and the Rangers Group Limited as a holder of a qualifying floating charge”.

Duff & Phelps have stuck in to this document very quietly, what everyone including CW have always believed or suspected. Rangers Group have a floating charge over Rangers Football Club, Ltd.  So in addition to the £9M in PAYE owed, the £4M in VAT they owe on the Ticketus deal, the “small tax case” of £3-4M  and the “big tax case”, of up to £75M which has not yet been decided by the First Tier Tribunal, Rangers Football Club possibly owe Craig Whyte’s Rangers Group £18 million.

Watch this space…

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