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Rangers Newco prepack not as you read elsewhere

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We gave STV credit on Wednesday for their reporting on SPL voting process required to decide what to do if a new company applies to join the league after an existing team ceases to exist (through prepack or other means).

I subsequently noticed in the same article they suggest Leeds United went into liquidation and returned with a phoenix  prepack.  This is incorrect.  Leeds United, then in administration, were sold in 2007 to Ken Bates’ newly formed company, with Bates agreeing a deal with creditors.  Leeds were, therefore, only liable for the statutory 10 point penalty for entering administration, although the league increased the punishment to 15 points as the club failed to follow correct administration procedure.

I don’t wish to harangue STV on what was an article with genuine information but they cite Leeds as a precedent: “there is no guarantee that the Scottish Premier League would act in the same way as their counterparts in England but the similarities between the regulations mean that the precedent may be used as a guide”.

If I was Rangers right now I would be trying to convince everyone that putting a football club out of existence, only to allow another company to pick up its league share, with a points total calculated from the position of the former club, is similar to a common administration.  It’s not.  This would be a completely different scenario.

Having discussed this matter with many people throughout the game and the media, I can find no precedent for a football club going out of existence and phoenix-ing back into the same league spot.

Airdrieonians failed in 2008, when the owners of Clydebank FC moved to Airdrie and renamed to Airdrie United.  Gretna FC were voted into the space created by the absence of Airdrieonians (then a Second Division team), but entered at the bottom of the Scottish Football League.

Gretna failed in 2008 and a new club based at the same ground successfully applied for membership of the East of Scotland Football League.  Annan Athletic entered the bottom rung of the Scottish Football League after Gretna’s demise, not into the First Division spot Gretna were unable to fulfil.  Third Lanark were in the bottom division of the Scottish Football League when they were replaced by Clydebank.

Gretna-Annan, Clydebank-Gretna, Third Lanark-Clydebank are the only precedents that exist.  If you fail, the team that replaces you joins the bottom rung of the Scottish senior league structure, there have been no exceptions, in Scotland or in England.

The SFA have a say in this matter also.  They must ratify any decision of the SPL board and grant a licence to a new club before if can play in the SPL or Scottish Football League.  The national association is made up of member clubs, most of whom stand to gain considerably if a Rangers Newco FC were to enter the Scottish Football League.

Irrespective of the SPL’s decision, the SFA better have some pretty good lawyers if they deviate from precedent. The football authorities have a duty to ensure their competitions observe meritocratic and moral correctness. It’s only ‘fit and proper.

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  1. Brilliant article Paul67.

     

     

    And with that I bid farewell to my working week and journey home. See you all later on the other side…

     

     

    Jobo

  2. The Battered Bunnet on

    Mort – that’s something else you didn’t know

     

     

    C_F – I posted previously that the Cetlic support will be highly influential in validating any Newco Rangers in a sporting context.

  3. donegalbhoy67 says:

     

    4 November, 2011 at 14:58

     

    i just learned who to spell FORSTER ive been spelling it wrong all this time

     

     

     

    My old man still calls Shaun Maloney, Mahoney. He has done since he came through. Glad he has gone. It’s embarrassing at the game.

     

     

    LB

  4. TBB

     

     

    I didn’t see that post, but I agree with you. At least I agree with you if you made the point, as I think you will have, that we should pay them about as much attention as you would to a sparrow in your garden.

  5. Watched it the other night there,wife says”whit are you watching

     

    down there” Treme says I.

     

     

    Need to keep my voice doon next time I’m singing a rebel toon in the hoose.

  6. Philbhoy - It's just the beginning! on

    TBB

     

    I’m just glad Mr Gordon had £277,900 to give to that poor chap who lost his eye.

  7. MurdochauldandHay says:

     

    4 November, 2011 at 15:10

     

     

    Sorry, my last post was for yoohoo.

  8. Neil Lennon Is A Celtic Soul Brother on

    Celtic_First says:

     

    4 November, 2011 at 15:24

     

     

    What you saying is technically right but I know quite a few Leeds fans and as far as they are concerned they still hold their history and see no difference in the old and new.

     

     

    Fortunately i don’t know any Airdrie Utd fans but I bet they feel the same as the Leeds’s ones!

  9. The Battered Bunnet on

    Mort – I didn’t know that.

     

     

    Philbhoy – I rather suspect the fellow will be bankrupted.

     

     

    C_F Yip, I suspect though that there will be some Celtic supporters who will enthusiastically embrace the ‘Newcold Firm’, and attempt to reproduce the ‘historic rivalry’. That will be regrettable.

  10. The Ghood will prevail on

    Livibhoy – puts me in mind of my late father (God rest him) who was complaining about a diving hun called Leverkausen.

     

    He meant, of course, Lovenkrands.

  11. Apologies if it may have been mentioned in previous post…but did I see correctly that Kayal was the Huddle spokepeerson last night even though Loovens was captain ?.

  12. Afternoon CQN

     

     

    Excellent articles today, Paul!

     

     

    I know many of you will have read BRTH article on the ScotsLawThoughts forum, so scroll by or have a 2nd read. It is an excellent article with a legal slant to it, well worth the read;

     

     

    While there has naturally been a focus on the possible exit/survival routes that may be countenanced by the Rangers PLC and/or a Rangers new co– and now some concentration on the actual details of the Whyte/Murray deal– any which way you look at it other than one there is a legal nightmare ahead for Stuart Regan and the newly transparent SFA. I suspect that things are far from clear at Hampden and there is a real danger that there are aspects to any application for admission by a new co that have not been considered– as yet– and which may well tilt the whole thing in another direction.

     

     

    Stop and consider this? What is the role of the Scottish Football Association? Yes it is there to regulate the laws of football in Scotland, to make rules and apply them, to consider and create new football legislation when appropriate, to ensure compliance with the regulation of its own parent bodies ( UEFA and FIFA) , To represent its constituent clubs where appropriate, to licence in terms of the regulations of both the SFA and UEFA, and at times to be a judicial body applying sanctions where breaches of the rules have been established.

     

     

    Oh Dear– what a lot of functions and responsibilities– and what a lot of conflicts of interest!

     

     

    As I have said elsewhere, The SFA does not just represent the SPL clubs– but all of Scottish Football! Some of the smaller clubs may well have a very different point of view to those clubs in the SPL. Many would welcome a giant of the Scottish game having to visit their stadiums twice a year as it would create a substantial financial bonus and enhance the public interest in their leagues– attracting sponsorship, advertising possibilities and so on that otherwise would not exist!

     

     

    However let’s concentrate on two of the SFA’s clear functions. As a licensing body and as a judicial body which imposes sanctions, The SFA is and must be subject to an obligation to the law that overrides any competing interest or claim by its constituent members. As a licensing body, it’s decisions are certainly open to Judicial review in the Scottish courts and I would suspect that a judicial review would be open to any of it’s members who disagreed strongly enough with any of it’s decisions.

     

     

    In the past, I have been involved with many judicial reviews concerning Licensing bodies over the years. Two grounds of review are that a) The decision reached is contrary to natural justice and b) that in reaching any decision the body concerned has unreasonably exercised its discretion– where a discretion has been exercised!!

     

     

    Pausing there, it is very much open to question whether an argument such as that outlined in the Daily Record recently could ever be formally argued before the SFA which is why I suspect that we are about to get a trial by newspaper!

     

     

    Any argument presented before a judicial body or a licensing body which contains the semblance of an argument which runs along the lines ” It is in your own financial interests to allow our application!” should immediately be dismissed in law as it creates a clear conflict of interest and makes a mockery of the alleged independent and impartial judicial or licensing function.

     

     

    Any such argument being considered would surely leave the SFA in a very uncomfortable legal place– not to mention UEFA or FIFA — where independence and freedom from personal and collective financial self-interest are under heavy scrutiny and criticism. Take note of the very platform that Platini was elected on!!

     

     

    So back to judicial review in Scotland.

     

     

    The current rules in an insolvency position are clear. On Administration ten points at least will be deducted. The ten points I believe is a minimum penalty and it may be that aggravating factors may attract a heavier penalty.

     

     

    If the Administration is not successfully concluded and liquidation follows the rules state that the licence is lost and surrendered– end of story. An application can then be made by a phoenix company for a new licence and in ordinary circumstances any such company granted that licence would start at the bottom of the league structure and the European regulations regarding the three-year embargo would apply.

     

     

    Any departure from that set of scenarios on the part of the SFA requires an exercise of their discretion, and in exercising any such discretion the SFA must act according to natural justice and must not exercise that discretion unreasonably.

     

     

    In that light, look at the footballing and legal facts– as opposed to the “If we are doomed, you are all doomed argument” which has no place in law.

     

     

    Rangers PLC have deliberately and recklessly broken and flaunted the footballing financial guidelines and have deliberately and recklessly ran up a debt with inter alia HMRC.

     

     

    Remember that this entire scenario comes about as a result of an attempt to avoid paying due revenues to a relevant tax authority as a result of a connived scheme to avoid paying the taxes that every other club is subject to. Further, I suspect that an examination of the relevant documents surrounding the creation of the EBT and the advice given to Rangers PLC about operating such a scheme will make it clear that no such advice can ultimately be relied upon fully and that there is a clearly stated risk that the entire scheme may well be one which the revenue can have declared illegal with the result that revenues will be due together with accumulating interest and taxes– and that therefore the Directors of Rangers PLC enter into such an agreement fully warned and at their own risk!

     

     

    Remember too that some of those Directors were paid under that very same scheme!

     

     

    So this is not a simple case of a business failing and falling into insolvency. This is a case of the Directors deliberately seeking a financial advantage over all competitors which they have been warned in advance may well be unlawful and have sanctions and penalties.

     

     

    That is a very different scenario to the insolvency of Dundee or Gretna and so on. It is a very different footballing scenario as well, as the entire scheme was designed to ensure that the club concerned could attract the very best players in the country and could win the premier tournaments of the licensing body!

     

     

    But there is worse to come. On two occasions Rangers have “poached” the national team coach in order to achieve the best possible management of their team. That may be fair enough in a commercial world. However, both of those managers will have wanted to know what the budget will have been to strengthen the squad prior to taking on the job. Let us consider the last such appointment when Walter Smith left Hampden to take up the hot seat at Ibrox.

     

     

    I will wager ( or at the very least wonder if ) that by that time the Directors of Rangers knew that there was a problem with the tax authorities and the famous or infamous EBT contracts? If so then we have a compounding of the Rangers situation.

     

     

    If the club had received notice of enquiries being made at that time by HMRC, then going by the advice previously given, they would also know that there was a possibility of a large repayment being due together with penalties and interest.

     

     

    The prudent director at that point may want to make provision for paying any such liability. Did Rangers? No!!!

     

     

    Instead, following upon the defeat by Kaunas they went on an unprecedented spending spree to ensure success– all at the cost of paying HMRC and at the cost of complying with the intention of the fair play financial legislation.

     

     

    Money that could have been used for debt repayment was spent on Mendes, Davis, Lafferty, Whittaker, Naismith ans so on– eventually that extended to the signings of Miller, Jelavic and everyone who followed. Absolutely no attempt at repayment of revenue debt, or the setting aside of money to meet revenue debt, was made.

     

     

    So this is not accidental insolvency as a result of poor trading– it is a direct result of financial irregularity and it should not be allowed to result in a benefit to the perpetrators of that financial irregularity. Does that argument sound familiar? Yes I thought it would– it is taken from the formal legal pleadings of Rangers PLC lodged in the Court of Session in answer to the claim lodged by one of the architects of this misfortune– namely Martin Bain Esq!

     

     

    So that is the stance on the financial irregularity of the current Rangers Board! That board of course went through a months long and very public due diligence exercise before acquiring a controlling stake in Rangers PLC. They knew and will have received full legal and accounting advice on the legal status of all revenue claims, how those claims came about and how those claims if successful could affect future trading and licensing of the football club and the PLC.

     

     

    In such circumstances, Craig Whyte and his cohorts have taken on the previously accepted risk. They are in an even worse position than the former board because they could have simply decided not to invest. They could have waited with any bid for Rangers PLC or its assets until after the First tier Tribunal had reached a decision and the full effect of any legal consequence was known. Yet they didn’t. Instead, in full knowledge and with the benefit of full advice they took on that risk!

     

     

    We can only speculate as to why that might be. It has been suggested that it as insisted upon by the bank. What would have happened if that had not happened? Perhaps the bank would have pulled the plug and………..? Well the legal consequences are spelt out above. The rules are clear.

     

     

    So under the current daily Record scenario, in the event of an Administration or even prior to it, the SFA will be approached by someone presumably on behalf of Craig Whyte to exercise an extraordinary discretion ( thus departing from the normal rules ) which it will be argued should apply to some new entity that wants to call itself Rangers because…….?

     

     

    And it is there that I hit a brick wall! Why should this extraordinary discretion be applied in these circumstances?

     

     

    If their stadium had been closed because of Fire or Catastrophe or some other physical reason that leads to financial ruin then that may be an argument!

     

     

    If all their players went on strike or broke contracts or something than that may be another.

     

     

    In fact any argument that these circumstances were not brought about by the club itself may gain some sympathy in law– but a deliberate and calculated act, the risk of which was accepted and taken on by the controller of the new applicant? Not sure about that!!!

     

     

    Whyte also has questions of his own to answer with regard to a business track record, source of funding, compliance with companies Act legislation, the ability to trade presuming no European Football ( and that must be legally presumed ) and in general answer the fit and proper fitness test. This is a test which he seems to have spectacularly failed in the eyes of the takeover panel at Rangers PLC as the Directors sitting on that panel refused their blessing and sanction.

     

     

    Those Directors have since resigned and some have entered the legal courts as a result of what they see as Whyte’s conduct. Whats more, in a few short months, Whyte has threatened to sue various journalists and other media outlets following their apparent criticism or questioning of the legal or business circumstances surrounding Rangers Football Club and Rangers PLC.

     

     

    So on what basis and under what grounds can the SFA reasonably exercise a discretion to a new applicant under the control of Craig Whyte in these circumstances? What would be the legal position of anyone who objects to any such discretion being exercised?

     

     

    I again stress that I don’t think that potential financial doomsday is a reasonable argument in law to put before a licensing body or a judicial committee– who of course must call for a report and seek to investigate all of the facts. Thus is far harder than is being suggested in the newspapers and of course if in advance discussions are taking place then all of the member clubs should be notified immediately.

     

     

    What’s more, any such procedure must surely take a proper legal course and a reasonable amount of time. Any Administration would have to occur before there is an application– indeed it may be that an actual liquidation has to occur before any new application because even in an Administration event all licence places are full. Further the SFA cannot agree to the favourable determination of any licensing application before it is made as that is clearly unlawful!

     

     

    No, for the SFA, the scenario outlined is a legal nightmare even if all the clubs wanted to agree to such a course. I am aware that there is a voting procedure of 11-1 which Rangers might want to invoke but you see even that very rule may well just be challenge-able on the basis of the voters having their own financial interests in mind as opposed to serving another function– an no licensing body can work legally on such a principle. If there is a conflict of interest any such party should take no part in the proceedings and so if anyone thinks that they will go bust in the event of Rangers going bust and going into liquidation should excuse themselves from any decision-making process.

     

     

    Two last points:

     

     

    Watch out for the detail of the FC Sion ruling as there may well be an impact on all of this in the detail of that decision.

     

     

    Lastly, Celtic Football Club are represented by Messrs Harper McLeod Solicitors who have a number of Licensing and sports law experts who will be only too familiar with all of the above. They are also familiar to the SFA and their judicial bodies, their legal representatives and so on. I have a great deal of respect for Rod McKenzie and his team and they will no doubt steer their clients in the proper legal direction if consulted on any licensing or regulatory manner– as the SFA well know!

     

     

    My apologies for the length of this post which I will now leave with the intention of returning to my day job!

  13. wycombebhoy says:

     

    4 November, 2011 at 14:52

     

     

    I’m sorry to hear about Tommy’s mother. No I wasn’t at the funeral. It’s great to hear you mention the names of some of the boys Norrie Innes (signed for Hibs) and Jim McDonald (Coventry City). Tell Tommy and all the others I was asking for them.

     

     

    How long have you been in Wycombe?

  14. Philbhoy - It's just the beginning! on

    I’m guessing the bhoys will have had a long lie in today, then to Lennoxtown for treatment, do a few stretches, (no training), a massage, a bit of bonding and plans discussed for Sunday.

     

     

    What an easy life these guys huv!

  15. TBB @ 15:17,

     

     

    Mr Phee said: “…..No-one expects to lose an eye when they go to play golf”.

     

     

    Clearly he has never attended the CQN Open.

  16. Just got a couple of extra tickets for the Rangers game on the 28th Dec. Guy at ticketmaster tells me they’re going like hot cakes…

  17. BhrambleJelly says:

     

    4 November, 2011 at 15:50

     

     

    Don’t waste your money ,there will be no huns to play.

  18. voguepunter at 15:52

     

     

    Aye but instead there will be champers served in the stand and live music on the pitch as the biggest “Rangers are out of business” party kicks off.

     

     

    Mort

  19. ‘Not a whit, we defy augury. There is special providence in

     

    the fall of a sparrow. If it be now, ’tis not to come; if it be not to

     

    come, it will be now; if it be not now, yet it will come—the

     

    readiness is all. Since no man, of aught he leaves, knows what is’t

     

    to leave betimes, let be.’

     

     

    Ole Hamlet thinks we should mind the wee sparrows.

  20. Voguepunter, plenty more to come.

     

     

    ASonOfDan, I missed that. Yes, we’ve been blaming Lennoxtown for long enough.

     

     

    donegalbhoy67, Bawsman, thanks.

     

     

    Len Brennan, yes, he was.

     

    EXILED TIM, I don’t think anyone knows how this will pan out.

     

    GerryAdamsBeard, cheers.

     

     

    Lennon n Mc….Mjallby, thanks.

     

    Patria O Muerte, sure will.

     

     

    tomtheleedstim, a v mucky business.

     

     

    Richie, cheers.

     

     

    Celtic_First, yes, must keep debate going.

     

     

    Jobo Baldie, will do.

     

     

    bjmac, thanks.

  21. Árd Macha says:

     

    4 November, 2011 at 15:58

     

    A good read, but whatever the rules I have no confidence of them being applied to the huns.

     

     

    Árd Macha

     

     

     

    That scares me too but this time they can squirm out of it can they?

     

     

    LB

  22. Regsarding who would vote to save them.

     

     

    If we assume they both go into admin, that means only 1 clubs needs to vote against their re entry.

     

     

    We will vote against it as if we don’t the club will see its fan base and income streams decimated.

     

     

    Inverness would in vote against them as they are in the relegation position and safety s guaranteed.

     

     

    Dunfermline should vote against them as they are to close to the bottom spot.

     

     

    Aberdeen should vote against them as they are to close and they hate em.

     

     

    Hibs should vote against Hearts at least, major payback for all the takeover talk.

     

     

    I’d say both are screwed if they get liquidated.

  23. Looking for other areas of precedent, is this potentially the same Fiorentina’s demise where the club reformed as Firenze, being unable to take the old club’s name or league position. Only a couple of years later was Firenze able to buy the name Fiorentina.

     

     

    Significantly, this was not an Italian football regulation but part of UEFA’s guidelines. Central was the distinction between a club being bought whilst in administration against a club winding up and a new club starting, with the latter being two separate businesses.

     

     

    The implicit idea that a company can trade massive debts for ten points is a dangerous precedent that HMRC will not want to see.

  24. derbyshirebhoy on

    Celtic_First says:

     

    4 November, 2011 at 15:24

     

     

     

    Supporting a football club is a mindset. It has nothing to do with ownership.

     

     

    Whatever the existing Rangers morph into those who have supported the old will follow follow the new and will see no break in the history or their attachment to it. Their allegiance will be as it is with ours – to the jerseys.

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