The prepack route for Rangers Newco FC


In the event of Rangers facing financial Armageddon after the resumption of their HMRC tax hearing a quick – very quick – recovery scenario is available to them.  At any point during next month’s hearing they may consider their position is no longer tenable and, unable to meet the tax bill, a new company could be formed which attempts a prepack administration.

A prepack offer from a new company, for example, Rangers Newco FC Ltd, would offer an administrator a deal for all assets of the club, including stadium and offer to meet outstanding player wages.  Deals like this seldom offer unsecured creditors much but even a small percentage might realise more cash than the administrator would gamble on raising in an unstructured sale.

In such circumstances, the administrator could accept as little as £4m for the unsecured creditors.

In normal business Rangers Newco FC Ltd would begin trading and this would be the end of the story but football is not normal business.  Rangers Newco FC would own a stadium and would employ some footballers but they would not be part of any league structure. They would need to apply for membership to the Scottish Football League or Scottish Premier League.

In this scenario, the death of Rangers Football Club would leave a vacancy in the SPL, presenting several financial, logistical and sporting challenges.  Without Rangers, the league would have to invalidate all this season’s results involving the club, one team would be without a game each weekend for the rest of the season, current TV contracts and sponsorship deals could be jeopardised, while future contracts would be worth a fraction of their current values.

Every team in the league would have to downsize and some would have to win fresh support from their bankers, which may or may not be forthcoming.

There is, of course, a resolution to this problem.

Rangers Newco FC Ltd could present an offer to the SPL.  The new company, with its stadium and thousands of potential supporters, could take the obligatory 10 point punishment for going into administration and adopt the place of Rangers FC, complete their fixtures and allow every other team in the league to fulfil commercial obligations.

If these events took place before Christmas, Rangers Newco FC could be debt-free and signing players in January to enhance their league challenge.

To force the deal through, Rangers Newco FC would require 10 of the remaining 11 SPL clubs to vote in their favour.  If any two clubs stand against them, they would have to apply for membership of the Scottish Football League, but, having researched this story for several days, I expect Rangers Newco FC Ltd would get enough support to pick-up the place of the defunct Rangers FC.

Any natural sympathies towards Rangers aside (which will not exist in all places), money talks and, apart from Celtic, this league is neck-deep in debt.  Celtic might be in a position to survive Rangers failing but it would cost our club tens of millions.

Crucially, if the other SPL clubs back Rangers Newco FC, they create a template for a snap recovery from their own troubles.  Instead of repaying your debts, simply get yourself into a safe league position, ditch the company, prepack and start again with a clean sheet.

This would create a clear incentive to stiff creditors.  While the banks will get wise and not offer unsecured facilities in future, HMRC and small traders are likely to become perennial fall guys.   Why would any mid-table team pay millions in tax, rates and policing bills, when they have a sporting incentive to ditch creditors without punitive penalty, freeing income streams to buy football bling in the next transfer window?

This would make a mockery of the Uefa predident Michele Platini’s Financial Fair Play initiative and make our league the poster-boy for Financial Doping.

Scottish football will be mortally wounded if it were to parachute a club straight into the upper echelons of the game while establishing a blueprint for the abandonment of creditors.

It is incumbent on all who care about the game, in Scotland and throughout the world, that we insist Scottish Premier League clubs do not allow a prepack company to phoenix into the shoes of a dead football club.

Celtic fans, as well as those from Aberdeen, Hibernian, Dundee United and St Johnstone, together with fans from Motherwell, who could become genuine championship contenders, and from those clubs who would avoid relegation if Rangers failed, must insist their club votes against any prepack company parachuting into the league.

The SFA executive must use whatever influence it can to prevent the name of Scottish football being brought into disrepute.  Politicians, who either have, or aspire to have, tax raising responsibilities, must register their abhorrence that a self-serving oligopoly should attempt to vote themselves an escape from paying tax.

Fifa and Uefa must explain to the Scottish FA that the days of shady financial deals in football are gone.

Watch the media coverage of these events carefully.  If and when the decision time comes, the case to acquiesce to Rangers Newco’s demands will be overwhelming.  Sincere ‘impartial’ observers will do their upmost to convince us all we must do whatever necessary to save Rangers for the good of the Scottish game.  Some voices will even tell you Celtic need Rangers Newco.  Whatever part of my club is dependent on Rangers I am willing to lose.

Rangers-HMRC tax hearing resumes next month, when there is also a two week international break.  The most important element of making a prepack offer succeed is to offer a fait accompli: ‘Here is a solution, you have no time and you have no alternative’.

Should Rangers go into administration, I believe this is a very, likely scenario. If you are a supporter of Celtic or any other club, make your views known.

Read issue 3 of CQN Magazine free online here or buy a print version at Magcloud.
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  1. One thing I always go back to, when we were in this position a few years back, what would the Rankers board have done?



    Twisted the knife I would suggest.



    Have no mercy.

  2. saltires en sevilla, agree.



    Honest Mistake, we can leave the SPL but we have nowhere to go. We would be out of business, not Rangers.



    DarranH, nothing to stop them applying to join the English league system but the FA would need to give them permission to play in Glasgow, which they have not given an inch on until now.



    dirtymac, HMRC would be powerless.



    Lizard King, without Rangers in the league, I expect our ticket income to dwindle significantly.



    MDCCCLXXXVIII, if Craig Whyte made such an offer he only has to fund £4m, does not need to cover his own payment. An administrator might struggle to confidently raise this from a non-going concern.



    Exiled Tim, yes, colours nailed.



    LivornoBhoy, cavansam, not aware of that rule.



    Eurochamps67, that is the key question, are we alone?



    ASonOfDan, agree.



    Folly Folly, unsecured creditors will be HMRC, Glasgow City, Strathclyde Police and a whole lot of small traders.



    Harald Flatpack, an administrator might not have enough money to stage another game of football. He needs to guarantee cash for the circa 300 staff employed on match day, or else he becomes personally liable.



    The Idiot, we must make our voices heard.



    Joe Filippis Haircut, yes, this is the moral hazard.



    Gordon_J, indeed.



    David Peter Deans, don’t worry about your ‘feedback’. I’ve had a whole lot worse.



    EXILED TIM, let’s make sure it doesn’t come to that.



    Celtic Mac, ha!



    lubo1977, yes.

  3. timbhoy2 says:


    27 October, 2011 at 13:18



    as usual i will be called all the huns of the day,but i see what my eyes see and it aint pretty anyway hail hail.





    Evidently the truth is somewhat painful for you.



    CQN, it’s like the Sword of Shannara, but better.

  4. I think there would other external influences on the SPL and clubs.


    If Rankers go into admin, it will be national and international news.


    They will be the biggest British club to go that way.


    The eyes of UEFA will be on the SPL and SFA.




    Uefa should be asked to investigate the SFA and their CL licensing.


    Political pressure will be put on the SFA.

  5. Seven Fishes Four Steaks on

    Paul, would rangers Newco be allowed to compete in Europe? I don’t think so. Coleraine went belly up in NI and came back as a Newco and won the cup. uefa didn’t allow them in Europe as they were less than 3 years old.




  6. Paul67 says:


    27 October, 2011 at 13:27



    What if the Police refused to police NewCo games unless they were paid in full? Are there any other unique service providers that might be able to do this?

  7. El Juarez Bravo (12.50)



    Absolutely spot on mate. We have to make it plain to all the other Clubs that the choice is absolutely clear. If they vote a corrupt, bankrupt organisation back into the league to protect one of their two pay days then they will definitely lose their other one. The only way forward is to protect the sporting integrity of the game. We as fans can also make that clear, both to our own Board and the other Clubs that we will not be part of it



    For starters I’d go and visit St Johnstone, a club that have done all the right things and suffered the yoyo of promotion and relegation in the face of Dundee et al’s financial doping, and find out where they’re at and if any of our ‘executive’ supporters can help them out, nudge nudge.



    And I’m not sure Romanov wouldn’t fancy his chances as being one of Scotland’s top two teams. Where will all the Eastern huns go on a Saturday?

  8. It will happen and you know it will. I hope this ends the premature celebrations of recent days.



    You think that’s bad? How will we feel if they take a 10 point penalty and still win the league?



    Anyone who says that is impossible is as deluded as those who were saying the hubs were going to disappear.



    And what will we do a out it……probably nothing.



    Fixing the XI would be a start but there seems little likelihood of that on recent evidence.

  9. “Whatever part of my club is dependent on Rangers I am willing to lose.”



    Can we not get that on t-shirts?



    Paul, I don’t think you can come up with anything to better that line.



    Might as well pack it in now!



    (Smiley of course :)

  10. Paul67…



    Excellent article. And of course an entirely correct standpoint from your good self. I’d rather Celtic be toughing it out in an honest 2nd division than paying the price for “inclusive” cup of coffee (so to speak…).



    The bottom line is that it might be the best thing that ever happened to Celtic. The crass materialism employed by our club doesn’t sit well with me, and maybe, just maybe, a new Celtic would be born from this mess. At least I hope it would.



    I think the vote might not be as much of a fait accompli as you think however… surely some clubs will be seduced by the idea of European money? And some others with a mid term, and achievable aim of Champions league football. Once again we’ll see which chairmen are glorified 5 a side pitch merchants and which have real ambition and love for their club…




  11. Paul67 says:


    27 October, 2011 at 13:27



    Thanks for that. Don’t think they’ll be getting permission any time soon.



    Back to lurking i go…

  12. LivornoBhoy-stands by Neil Lennon on

    Paul67 says he is not aware of any rule which might bar a pre-pack New Rangers from Euro football.



    Is this just an urban myth? Could someone who is familiar with UEFA rules clarify the position on this, please?

  13. p8ddy says:


    27 October, 2011 at 13:31



    You’ve hit upon something I think. If the club were to resign SPL and join SFL in 3rd division would it be a rallying cry that would see the crowd numbers maintained? Could we get through it with minimal losses?

  14. A prepack offer from a new company, for example, Rangers Newco FC Ltd, would offer an administrator a deal for all assets of the club, including stadium and offer to meet outstanding player wages. Deals like this seldom offer unsecured creditors much but even a small percentage might realise more cash than the administrator would gamble on raising in an unstructured sale.



    If this scenario unfolds, and given we are being told that even without losing the tax case they have massive cashflow problems and an unsustainable wage bill, would the Newco still requrie to have a ‘firesale’ in January and next summer? Surely there would still be no credit facility from any banks.

  15. Depressing stuff Paul.



    I agree that this is wrong on too many levels to count. However, as you say Celtic stand to lose a lot of money if Rangers are treated harshly (which is highly unlikely in any event), so no matter the ramifications amongst the Celtic support, would you seriously expect Celtic to vote against the re-admittance of Rangers Newco.



    Personally, I think we’ll support their re-admittance – too much for us to lose. The whole of Scottish football needs to react strongly. It’s an opportunity for the SPL to re-design it’s rules, so that men like Murray, Whyte, Romanov, Pearse Flynn and others can’t continue to undermine our game. How can Celtic operate as a PLC in such an environment. As a club we must demand total reform. It is not necessary to continue the present model, Germany has shown us the way forward – and it’s interesting to note that Germany is second to Scotland in the per capita attendance ranking, so there’s a useful comparison.



    Rangers will not be the club who are thrown to the lions. However, the next time there should be zero tolerance and any club who cannot show they are balancing their books (or initially doing their level best) should be relegated.



    We can’t change the past, and no matter how much anger there is, we are likely going to have to bite the bullet and accept what’s coming. That doesn’t mean we should capitalise on the opportunity it gives us – not least the right to leave the SPL given certain circumstances, for example clubs not balancing their books. We need leverage anyway, let’s take this chance.

  16. merseycelt dumps sadsally – We should also consider at what price we would be prepared to accept a “Huns Reunited” being parachuted into the league.



    I would suggest:



    A 20 point penalty this season.


    No eligibility to qualify for Europe for the next 7 seasons.


    Huns Reunited must not, in any sense, inherit the honours won by the now deceased club Rangers FC.



    Even if we can’t get one other club to vote with us against them being accepted back in the SPL (and if we can’t, what is Peter Lawwell for?), I’m sure the above would be tempting to chairmen of other clubs.



    However, I still think it would be a disaster for Scottish football to effectively allow Rangers to cheat their way out of their responsibilities. It would not only erode the credibility of the game, but I imagine it would swiftly lead to creditors of other clubs seeking to get their money back as soon as possible, before the others follow Huns Reunited’s example.



    The best thing for Scottish football would be to promote a club from the First Division and allow Huns Reunited to join the Third Division and work their way up on merit. (thumbsup)

  17. merseycelt dumps sadsally on

    Since the league would have to be recast, at the very least Celtic could make it a condition of acceptance that we negotiate our own future TV deals.



    I’m not being defeatist, just realistic!



    For example, when Lenny was being literally and metaphotrically battered last year, who, within that bastion of democractic free speech that is scottish society, voiced their support for him?



    How do you think this situation will be portrayed in the media? Celtic will be on their own so they might as well get whatever they can.



    What is the alternative? Disband as the huns phoenix rises from the ashes? Now, the meeja would love that!




  18. JinkyvJohnGreig-saysitall on

    Folly Folly says:


    27 October, 2011 at 13:19



    Last year I was up for boycotting a few grounds, Motherwell, Hearts and Kilmarnock being the main. Now I’d say just boycott one of them. take an absolute max 1,000 tickets and let it be known that is all we will be taking. Kilmarnock would be the obvious one for me, but my guess is that would hurt M’well just as much. Spend the money that would have been spent in the club shop or on a burger at the next home game. I’d specifically target one club at a time…

  19. I would take 30k crowds at CP, all big wage earners removed from our wage bill and more younger homegrown players regularly winning trophies, with Newco FC starting back in Division 3, rather than vote them straight back into the SPL.

  20. Kayal33 – If this scenario unfolds, and given we are being told that even without losing the tax case they have massive cashflow problems and an unsustainable wage bill, would the Newco still requrie to have a ‘firesale’ in January and next summer? Surely there would still be no credit facility from any banks.



    Don’t worry, Craig Whyte’s a billionaire. (thumbsup)

  21. It would be 13 points not 10.



    No club would vote them in if it meant existing OF structures are in place. Romanov would not vote for it. Pre pack admin can only happen if the courts approve. Large HMRC debts brought about due to tax evasion means it is not granted usually and that HMRC will pursue the Directors. Hence why no player was sold in the summer. Hence why Sir David Murray and his poodles want to see the goodship Rangers sink before the big taxcase.



    Think about it a Newco hun FC is bought for 4m in November and sells Jelavic,mcgregor,Davis,whittaker for 16m in February and the courts approve this scenario ?




  22. rt rev david hay says:



    27 October, 2011 at 12:36



    the celtic board will vote for rangers survival.



    when they do…they lose me.




    Me too. This must NOT be allowed to happen.

  23. nothing without fans on

    LivornoBhoy-stands by Neil Lennon at 13:33



    Apart from exceptions UEFA may make on a basis given here, the regulations state:



    UEFA licensing regulations state:



    Chapter 2: Licence Applicant and Licence Article 12 – Definition of licence applicant


    1 A licence applicant may only be a football club, i.e. a legal entity fully responsible for a football team participating in national and international competitions which either:


    a) is a registered member of a UEFA member association and/or its affiliated league (hereinafter: registered member); or


    b) has a contractual relationship with a registered member (hereinafter: football company).


    2 The membership and the contractual relationship (if any) must have lasted – at the start of the licence season – for at least three consecutive years. Any alteration to the club’s legal form or company structure (including, for example, changing its headquarters, name or club colours, or transferring stakeholdings between different clubs) during this period in order to facilitate its qualification on sporting merit and/or its receipt of a licence to the detriment of the integrity of a competition is deemed as an interruption of membership or contractual relationship (if any) within the meaning of this provision.

  24. Vinibhoy - Named Neil Lennon on his birth certificate on

    We didn’t get any help through-out their 9IAR.



    They need to be punished.



    As a few have said on here, if Celtic vote to save “them” I will be completely sickened.



    Surely teams like Hearts, Motherwell will see their chance of winning the SPL and vote against?

  25. Paul 67



    Excellent article Paul which I am sure will be read and contemplated beyond these pages.



    Should our Board do anything other than Non support any manipulation by that mob then it will be time to seriously question,at an individual level,the credentials of the Board members.



    Like you I can happily survive without them.

  26. League reconstruction, with 2 leagues of 18, would quickly be voted through should 2 SPL clubs vote against letting them straight back in. That would leave them only 1 season out of the top league. The SFA will make sure of it.

  27. Hard to believe this scenario would be allowed to pan out.



    Surely the SFA are not so short sighted or bereft of forward thinking to contemplate such a scenario being acceptable.



    Scottish football is not dead yet but if this is allowed to happen, well one more season I would give it.



    I could not justify spending £500 a season when the outcomes have already been established before a ball is kicked.



    What players would want to come to Scotland?



    What players would want to come to Celtic KNOWING they have every chance of being crippled and no chance of winning?

  28. LivornoBhoy-stands by Neil Lennon on

    Nothing without fans says:


    27, October 2011 at 13:38



    Cheers. That seems to confirm a 3 year ban.

  29. Whoyouloovenat?? on

    Just a thought



    Some are saying it would be terrible for Scottish Football for Rangers to “fold/crumble/ be liquidated” etc etc because of gate reciepts, tv commitments etc etc



    Has anyone thought about what if….



    Rangers go under and start in the third division, take the crowds to the 3rd division, 2nd division, 1st division and then back into the SPL, this would improve financial stability and improve other teams balance sheets by “spreading the wealth” thus making other teams stronger and improve scottish football??

  30. Paul67



    I feel a bit sick after reading that.



    If Celtic vote to allow Rangers back, I won’t set foot inside Celtic Park again.



    The sight of Rangers sauntering up to resume their seat at the top table, pats on the back all round, like a mafia boss returning from a brief stint in prison – it’s actually too hideous to contemplate.



    Never mind if Celtic vote for it. If it happens, it’ll kill my interest in Scottish football.



    No more words from me on the subject.

  31. PAUL67,




    i put this to you is it possible that a secret agreement has already been done with celtic directors,


    hence the reform of the sfa which was so smooth it was totally out of character, im sure at the highest levels


    with in the sfa they new the serious nature of rangers plight and maybe asked celtic what was their price not to


    obstruct a newco taking their place.

  32. If Celtic were to be put down to the 3rd division tomorrow I would still support them. Losing Rangers would not dilute my love for the club in any way.



    Apart from anything how much would we ACTUALLY lose?



    Bigger crowds at a few games a season. TV money would drop but do we really rely on domestic TV money? I don’t think so, it’s pitiful! We’d be Champions League qualifying rounds every year. What do we actually lose?



    Smaller clubs would lose out on away fans but surely with the league becoming more competitive they would gain larger crowds?



    Losing Rangers may also help Celtic gain entry into English leagues, no sectarian issue and no issue of barbaric fans tearing up towns.

  33. Wouldn’t be surprised if this happened; though surely if a newco was granted entry to the SPL, surely they would have to start with zero points? afterall, if would be an entirely different club so to speak so what right would they have in appropriating all of old rangers points etc?



    for the record, I couldn’t care less if losing rangers was “bad for scottish football” (soon to be seen in all the tabloids no doubt) at the end of the day they have cheated the taxpayer and the league by financial doping; the only correct, ethical punishment is for them to start right back down at the bottom.



    solution seems pretty simple to me, simply wipe all scores teams have had against rangers and then work out an arrangement whereby all clubs can meet their remaining fixtures



    if celtic were to vote rangers back in i’d be disgusted

  34. sorry folks , made a typo in my post at 12:37 – bloomin’ auto-correct ! – it should read



    Ghuys ,



    latest predictor games up now at http://www.thekanofoundation.com/predictor.html .



    Remember , we’re also having a fund-raiser at end of November – sponsored leg-wax – ouch , which I’ve been volunteered for.



    If you fancy sponsoring me , drop a line to contactus@thekanofoundation.com.




    Paul67 , could you correct my earlier post or remove it – cheers








  35. enmac75 stands shoulder to shoulder with Neil Lennon on

    interesting article paul67



    the very thought if them getting away with it, makes my stomache churn. If the newco huns are allowed in, then i will not be attending any football matches in scotland again, and i susspect most fellow tims feel this way. the celtic plc will lose considerably more through gate receipts, merchandinsing etc… over allowing them to continue darkening our doorsptep. Scottish football will die then. without a shadow of a doubt.



    i would go a step furter than just letting newco huns start from devision 3. 1st of all, titles won during the ebt scam, wiped from old rangers record books. 2nd, the length of time these ebts were operated, thats how long they should remain outside the spl. they can work their way up to the first devison, but no promotion untill they have served the time.



    and following on from those two points, rangers would be spreading their ‘wealth’ amongst the lower devision clubs, whilst dundee utd, hearts etc… have a chance of competing for the leauge title

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