No redundancies as Whyte set for Prepack offer today

We have discussed the Craig Whyte narrative here in some detail since October last year when we first suggested he was preparing to liquidate Rangers and attempt a prepack recovery.  I expect this to be put into motion today.

You can ignore any meetings Duff and Phelps hold with prospective buyers of the club, this is window dressing.  Craig Whyte and his partner company, Ticketus, are the only people in position to make a viable offer for the business.  They hold security on the stadium and Murray Park with Ticketus owning the first 26,000 season tickets (approx.) sold for the next three years.  It would cost approximately £40m to release Ticketus security plus whatever is owned to Whyte.  No one will offer to cover these costs.

Expect Duff and Phelps to conclude their meetings and report that they are in possession of a genuine offer from Whyte/Ticketus, or their proxy, to buy the assets of the company.  The proxy may be required as pretty much everyone who has touched this club in recent years would not be considered a Fit and Proper person and would fail the requirement not to be involved with an insolvency within the last five years.

The offer for all assets will be for a nominal amount and will be conditional on all legal action against Whyte or his companies being dropped.  Duff and Phelps will accept the offer.

Whyte cannot afford to allow large scale redundancies as he needs to be able to sell these players in the summer or play those he is unable to sell.  With the players not agreeing to a short-term cut in pay, he has to make his move now, despite the enormous risks involved in going early.

Duff and Phelps could have made redundancies 24 days ago and ensured the club would be able to finish the season, or at least survive until the tax verdict, but retaining the football squad was an important part of Whyte’s forward plan – and Whyte’s notional offer will have been known to them from the beginning.

HM Revenue and Customs will take a bath for their £75m, Whyte will emerge with all property assets and the football club, although the club will carry the significant burden of selling tickets for Ticketus.

The SPL board will have to vote within the next week on whether or not to allow Rangers Newco to continue with the same league membership as Rangers FC.  Whyte will have to take an enormous chance that his proxy will be presentable enough to allow them to turn a blind eye to the enormously inappropriate behaviour.

The vote could go either way but I expect Celtic will be the only club to object.

The issue is complicated by legacy issues.  Neither the SPL nor the SFA have acted on the improper registration of players matter yet.  If any of the current Rangers team had their current season contracts registered with the alleged improper procedures, games involving those players will have to be awarded a 3-0 defeat to Rangers.

The SPL will have to come up with a verdict on this matter within days or else revisit the matter in a few weeks, after deciding on what to do with Rangers Newco.

The SPL must also consider the issue of precedent, the consequences of enabling a club to disenfranchise a £75m creditor cannot be underestimated.

HMRC may also have an input here.  They stand to lose most from this deal and may seek court intervention, arguing that liquidating the company prior to the FTT verdict is unnecessary and prejudicial to their interests.

Issue six of CQN Magazine, the Fit and Proper edition, is set to become a landmark collectors item. You can browse the magazine online here but you can buy your own hard copy by clicking on the link below.  Read with 20-20 vision…..

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