Generic Sevco / Rangers meltdown thread

[Sergio sledge]

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See, that's my big worry.

If HMRC agree to a CVA on the £15m, it means that a buyer can take the club over, through his/her company, with a much-reduced debt. That leaves the BTC in RFC(the old company). Even if that went against RFC, there would be nothing in that company to pay it with.

No liking this idea one bit.

How would this work? Surely if they agree to a CVA for the current debt as it stands with Rangers FC, a new owner takes over Rangers FC paying the CVA, Rangers FC are then hit with the liability from the BTC and HMRC have a chance to recover that money. I don't understand how it would be a different company that wouldn't be liable just because they have come out of administration with a new owner.

If they are liquidated now, HMRC will only get a proportion of the £15m they are owed and have no chance of getting the BTC monies, but if they agree to a CVA now, they may get less immediately, but give themselves a chance of getting some of the BTC money.

[CropleyWasGod]

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Sorry guys, cynicism got the better of me. I must repeat to myself "Rangers are stuffed, Rangers are stuffed, Rangers are stuffed ......... There, I've almost convinced myself.. I promise I won't do anything silly while we wait for the axe to fall.

Ach you're okay. In times like this, it's easy to jump on headlines or misguided quotes from journalists who, although doing their bit, don't always understand the issues.

And then of course, there's the internet.....

[ScottB]

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This is what worries me.

I'm not normally one for conspiracy theories, but.............,

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Rangers are still heading for liquidation because no one will buy a club with the level of debt they have and although The Sun is claiming HMRC might do a deal over the "big tax case", there is nothing to confirm this.

But in the end, they have to, and we (the taxpayers) kind of need them to as well.

Scenario A: HMRC rock up, demand their £50million + which Rangers obviously don't have. Club is liquidated, pays back squat and returns in rude health.

Scenario B: HMRC do the apparently dreaded deal, Rangers repay their debt over a number of years, no liquidation, but a financially weakened Rangers for up to a decade or more.


Now, while some may be getting all in a lather about Rangers being destroyed, in actual fact they'd simply reform having ducked all their debts and screwed the lot of us. HMRC want their cash, doing a deal is the way to get it, while happily ensuring Rangers go through many years of penance to pay for their crimes.

[CropleyWasGod]

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How would this work? Surely if they agree to a CVA for the current debt as it stands with Rangers FC, a new owner takes over Rangers FC paying the CVA, Rangers FC are then hit with the liability from the BTC and HMRC have a chance to recover that money. I don't understand how it would be a different company that wouldn't be liable just because they have come out of administration with a new owner.

If they are liquidated now, HMRC will only get a proportion of the £15m they are owed and have no chance of getting the BTC monies, but if they agree to a CVA now, they may get less immediately, but give themselves a chance of getting some of the BTC money.

It's all about separate entities.

1. RFC, as they are just now, agree a CVA. Let's say £20m has to be paid.

2. RFC2, the new company, say... we will buy your assets for £20m. Those assets are the properties, the players, perhaps the SPL membership, and the "brand".

(I know the figures are arguable, but hear me out on the theory)

3. RFC take the £20m, and pay off their debts. They are now clear, and can dissolve themselves. (I say "can", but HMRC would have the right to object to that.)

4. RFC2 have the assets mentioned above, and no debt.

5. the BTC verdict is announced, and HMRC win it. They are owed £49m.

6. HMRC go along to RFC and ask for the £49m. There's nothing there, so they're stiffed.



Now, I know Cav is going to come along and say that some of RFC's debt might have to be transferred to RFC2. We're both a bit unclear on that. The other sticking point is that HMRC might apply to the Courts for any transfer of the assets to be prevented (interdicted?) until such times as the BTC is settled, on the grounds that their position is prejudiced by that transfer.

[Spike Mandela]

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Interesting that the Administrators seem to think that there is a good chance that the Club can get out of the Ticketus situation. Could this be because CW signed the contract before he owned Rangers and is not therefore legally binding ?

But it was used to pay Rangers Lloyd's debt? Surely they either owe it to CW or to Ticketus? Surely if Ticketus can follow the paper trail to Lloyds they can get their money back.

[CropleyWasGod]

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But in the end, they have to, and we (the taxpayers) kind of need them to as well.

Scenario A: HMRC rock up, demand their £50million + which Rangers obviously don't have. Club is liquidated, pays back squat and returns in rude health.
Scenario B: HMRC do the apparently dreaded deal, Rangers repay their debt over a number of years, no liquidation, but a financially weakened Rangers for up to a decade or more.


Now, while some may be getting all in a lather about Rangers being destroyed, in actual fact they'd simply reform having ducked all their debts and screwed the lot of us. HMRC want their cash, doing a deal is the way to get it, while happily ensuring Rangers go through many years of penance to pay for their crimes.

It won't "pay back squat". It will have to sell its properties, and there will a fair chunk in there for hmrc.

[CropleyWasGod]

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But it was used to pay Rangers Lloyd's debt? Surely they either owe it to CW or to Ticketus? Surely if Ticketus can follow the paper trail to Lloyds they can get their money back.

They definitely don't owe it to CW. Paul Clark said as much earlier today.



(edit... nipping down to ER for my Ayr tickets... back soon)

[Smidge]

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It's all about separate entities.

1. RFC, as they are just now, agree a CVA. Let's say £20m has to be paid.

2. RFC2, the new company, say... we will buy your assets for £20m. Those assets are the properties, the players, perhaps the SPL membership, and the "brand".

(I know the figures are arguable, but hear me out on the theory)

3. RFC take the £20m, and pay off their debts. They are now clear, and can dissolve themselves. (I say "can", but HMRC would have the right to object to that.)

4. RFC2 have the assets mentioned above, and no debt.

5. the BTC verdict is announced, and HMRC win it. They are owed £49m.

6. HMRC go along to RFC and ask for the £49m. There's nothing there, so they're stiffed.



Now, I know Cav is going to come along and say that some of RFC's debt might have to be transferred to RFC2. We're both a bit unclear on that. The other sticking point is that HMRC might apply to the Courts for any transfer of the assets to be prevented (interdicted?) until such times as the BTC is settled, on the grounds that their position is prejudiced by that transfer.

I think the point where such a scheme falls down is that the CVA would have to identify where the cash to pay off the creditors is coming from. If that says "from a sale of all our assets to a newco", then I think HMRC would object as it doesn't get them a second bite at the cherry.

[Part/Time Supporter]

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They definitely don't owe it to CW. Paul Clark said as much earlier today.

That's his opinion.

[CropleyWasGod]

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That's his opinion.

...and the opinion of every accountant and Insolvency Practitioner I've heard talking about it. I can't see how it could be any other way.


Now beat it... I've got tickets to pick up

[CentreLine]

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It's all about separate entities.

1. RFC, as they are just now, agree a CVA. Let's say £20m has to be paid.

2. RFC2, the new company, say... we will buy your assets for £20m. Those assets are the properties, the players, perhaps the SPL membership, and the "brand".

(I know the figures are arguable, but hear me out on the theory)

3. RFC take the £20m, and pay off their debts. They are now clear, and can dissolve themselves. (I say "can", but HMRC would have the right to object to that.)

4. RFC2 have the assets mentioned above, and no debt.

5. the BTC verdict is announced, and HMRC win it. They are owed £49m.

6. HMRC go along to RFC and ask for the £49m. There's nothing there, so they're stiffed.



Now, I know Cav is going to come along and say that some of RFC's debt might have to be transferred to RFC2. We're both a bit unclear on that. The other sticking point is that HMRC might apply to the Courts for any transfer of the assets to be prevented (interdicted?) until such times as the BTC is settled, on the grounds that their position is prejudiced by that transfer.

This looks a little too much like the piece of fiction we talked about yesterday. The only ones getting burned here are CW, the tax man (you and me) and scottish Football (you and me).

I'm with many others here. I will be looking very closely at what SPL/SFA do and if they fold to this shower. If they do I will keep tabs on what the Hibees are doing but Scottish football generally will have died on the alter of OF bias and will have lost all credibility. As they say in the den, with regret, "I'm out"

[CropleyWasGod]

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I think the point where such a scheme falls down is that the CVA would have to identify where the cash to pay off the creditors is coming from. If that says "from a sale of all our assets to a newco", then I think HMRC would object as it doesn't get them a second bite at the cherry.

Ah, is that right? Didn't know that.

If that's the case, then yeah, you're probably right.

[banchoryhibs]

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Correct. It was The Sun wot said it. Ignore it.

Taking the "test case" scenario a bit further, I did read that the RFC judgement, when it comes, is not necessarily to be relied on for future cases involving football clubs. That is because it is a "First Tier" Tribunal, and apparently that doesn't have any clout in setting precedents. However, if it goes further up the chain, perhaps through appeal, those Courts higher up will be setting precedent.

That said, the verdict in RFC's case will certainly help to shape HMRC's approach in those other cases.

The use of an EBT as a tax avoidance device was widespread, it was not just used by football clubs. Given that this device may have been used by very large, as well as medium to small, businesses I would be astonished if HMRC will concede principal and do any public deal. I'd guess that any tax lost by Rangers going into liquidation would be dwarfed by the loss of tax within the wider business community if such a deal was done.

I also doubt any first tier decision in the Rangers case could set a precedent as it would appear that Rangers may not have followed the EBT "rules", i.e. if contractual payments were found to have been made via the EBT this is enough for HMRC to win. Normally you would not expect to find such a blatant abuse of the rules. The Rangers case would then stand apart from others.

[Smidge]

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Ah, is that right? Didn't know that.

If that's the case, then yeah, you're probably right.

I don't know for sure, but I can't believe it's not the case. Otherwise, why would ANY creditor agree to a CVA?

[Sergio sledge]

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It's all about separate entities.

1. RFC, as they are just now, agree a CVA. Let's say £20m has to be paid.

2. RFC2, the new company, say... we will buy your assets for £20m. Those assets are the properties, the players, perhaps the SPL membership, and the "brand".

(I know the figures are arguable, but hear me out on the theory)

3. RFC take the £20m, and pay off their debts. They are now clear, and can dissolve themselves. (I say "can", but HMRC would have the right to object to that.)

4. RFC2 have the assets mentioned above, and no debt.

5. the BTC verdict is announced, and HMRC win it. They are owed £49m.

6. HMRC go along to RFC and ask for the £49m. There's nothing there, so they're stiffed.



Now, I know Cav is going to come along and say that some of RFC's debt might have to be transferred to RFC2. We're both a bit unclear on that. The other sticking point is that HMRC might apply to the Courts for any transfer of the assets to be prevented (interdicted?) until such times as the BTC is settled, on the grounds that their position is prejudiced by that transfer.

I see, so you are talking about a new company buying all of the original companies assets, rather than a new owner of the original company. Surely there is legislation in place to stop a company selling off all its assets to avoid having to pay known potential liabilities?

[JeMeSouviens]

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5. the BTC verdict is announced, and HMRC win it. They are owed £49m.

HMRC have already issue Rangers an assessment for the £49M. Although they have not attempted to collect on it pending the outcome of the appeal, I believe the debt is owed already.

[GreenPJ]

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I see, so you are talking about a new company buying all of the original companies assets, rather than a new owner of the original company. Surely there is legislation in place to stop a company selling off all its assets to avoid having to pay known potential liabilities?

Also would newco not also require the sanctioning of the SPL as they would be the company/club looking to participate in the SPL?

[Bighoose]

Was Donald Rumsfeld (ex USA Defense Secretary) talking about the Gers situation when he was quoted saying -

“The message is that there are no “knowns.” There are things we know that we know. There are known unknowns. That is to say there are things that we now know we don’t know. But there are also unknown unknowns. There are things we do not know we don’t know. “

[JeMeSouviens]

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I see, so you are talking about a new company buying all of the original companies assets, rather than a new owner of the original company. Surely there is legislation in place to stop a company selling off all its assets to avoid having to pay known potential liabilities?

Nope, this is what's known as a pre-pack.

http://en.wikipedia.org/wiki/Adminis...administration

The government were supposed to be introducing legislation but seem to have backtracked:

http://business-finance-restructurin...#axzz1ocYRgjtU

[Spike Mandela]

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This looks a little too much like the piece of fiction we talked about yesterday. The only ones getting burned here are CW, the tax man (you and me) and scottish Football (you and me).

I'm with many others here. I will be looking very closely at what SPL/SFA do and if they fold to this shower. If they do I will keep tabs on what the Hibees are doing but Scottish football generally will have died on the alter of OF bias and will have lost all credibility. As they say in the den, with regret, "I'm out"

I'm out also. Disillusioned doesn't even come close to how I feel.

[JeMeSouviens]

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Also would newco not also require the sanctioning of the SPL as they would be the company/club looking to participate in the SPL?

Whatever spin D&P are putting out, if the current Hun entity is liquidated, there will be no legal connection between OldHuns and NewHuns. They will have to register with the SFA as a new club (so no europe for 3 years) and attempt to railroad the SPL into giving them OldHuns' place in the SPL. If the SPL do the right thing they will have to apply to the SFL.

[greenginger]

If Craig Whyte is deemed not to have a charge over Rangers assets (Ibrox and Murray Park) because he did'nt put any of his own money in, whats to stop him invoicing the club now for his time and expenses pre and post take-over.

I know some smart accountants who could dream up millions of pounds in consultancy fees, advice fees, Whyte's own time etc etc.

If the administrators say the fees are excessive , he can point out he is charging the same rates as Duff and Phelps.

[JeMeSouviens]

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I'm out also. Disillusioned doesn't even come close to how I feel.

100% agree on being out should this come to pass but ... now is not the time for disillusionment, now is the time to lobby Hibs to do the right thing. A newco Huns is still by far the likeliest option. Petrie has to realise that we will not stand for a corrupt Hun re-entry.

[CentreLine]

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Whatever spin D&P are putting out, if the current Hun entity is liquidated, there will be no legal connection between OldHuns and NewHuns. They will have to register with the SFA as a new club (so no europe for 3 years) and attempt to railroad the SPL into giving them OldHuns' place in the SPL. If the SPL do the right thing they will have to apply to the SFL.

The SPL and SFA had better think long and hard how they handle this because if they make the wrong choices then they will stripped Scottish football of a large slice of its fanbase. It really is that serious. We have all known for years that football here is run for the benefit of only two teams but it has never been quite so publicly true as it will be if they cave in this time. Newco Rangers can only start in Div3. If it is any different then we may as well all pack up and go

[Peevemor]

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It's all about separate entities.

1. RFC, as they are just now, agree a CVA. Let's say £20m has to be paid.

2. RFC2, the new company, say... we will buy your assets for £20m. Those assets are the properties, the players, perhaps the SPL membership, and the "brand".

(I know the figures are arguable, but hear me out on the theory)

3. RFC take the £20m, and pay off their debts. They are now clear, and can dissolve themselves. (I say "can", but HMRC would have the right to object to that.)

4. RFC2 have the assets mentioned above, and no debt.

5. the BTC verdict is announced, and HMRC win it. They are owed £49m.

6. HMRC go along to RFC and ask for the £49m. There's nothing there, so they're stiffed.



Now, I know Cav is going to come along and say that some of RFC's debt might have to be transferred to RFC2. We're both a bit unclear on that. The other sticking point is that HMRC might apply to the Courts for any transfer of the assets to be prevented (interdicted?) until such times as the BTC is settled, on the grounds that their position is prejudiced by that transfer.

Could HMRC/the creditors not stipulate a buy-out of RFC in installments? For example RFC2 buy the assets for say £20m immediately + £2.5m per year over 10 years. RFC2 would be paying nearer the true worth for a debt free Rangers and the creditors would get more money over a longer period.

[s.a.m]

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100% agree on being out should this come to pass but ... now is not the time for disillusionment, now is the time to lobby Hibs to do the right thing. A newco Huns is still by far the likeliest option. Petrie has to realise that we will not stand for a corrupt Hun re-entry.

That's quite catchy! If you're careful with the syllables, it works to come and have a go.

[CropleyWasGod]

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I see, so you are talking about a new company buying all of the original companies assets, rather than a new owner of the original company. Surely there is legislation in place to stop a company selling off all its assets to avoid having to pay known potential liabilities?

There is legislation that covers so-called "phoenix companies", where the owners and officers of the new company are essentially the same as those of the old.

However, I am not sure that it covers situations like this, where the owners are different. Cav thinks there are such provisions. I would hope he's right.

[CropleyWasGod]

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HMRC have already issue Rangers an assessment for the £49M. Although they have not attempted to collect on it pending the outcome of the appeal, I believe the debt is owed already.

You're right, of course, that the assessment has been issued.

That might be another Court case to decide whether it's a valid debt yet.

[CropleyWasGod]

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If Craig Whyte is deemed not to have a charge over Rangers assets (Ibrox and Murray Park) because he did'nt put any of his own money in, whats to stop him invoicing the club now for his time and expenses pre and post take-over.

I know some smart accountants who could dream up millions of pounds in consultancy fees, advice fees, Whyte's own time etc etc.

If the administrators say the fees are excessive , he can point out he is charging the same rates as Duff and Phelps.

I was thinking about the CW debt thing on my way to ER just now (see, i don't spend ALL day on here!).

If CW sticks to his line that he has a valid security (even though I reckon he doesn't), he does of course have the option of applying to the Courts to have his claim upheld. Whether or not he wins that argument, the main effect of that would be to further delay any CVA or sale.

Now, we wouldn't want that , would we?

[CropleyWasGod]

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Could HMRC/the creditors not stipulate a buy-out of RFC in installments? For example RFC2 buy the assets for say £20m immediately + £2.5m per year over 10 years. RFC2 would be paying nearer the true worth for a debt free Rangers and the creditors would get more money over a longer period.

The theory of that works for me. I have to get my head around the practice, though. On the face of it, RFC2 are getting a good deal... paying the cost of the business up.

Some time ago, I came to the conclusion that the only way HMRC were going to get all of their money, including the BTC, would be to take it over a long period of time. I have never known anyone to get 10 years, for example, to pay off Revenue debt; that said, I have never dealt with such large numbers. If they did do a deal like that, again, it could set a precedent.