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. Dave King is very unlikely to be a player behind the scenes. The South African taxman got £250m from him if recent comments and links on RTC is to be believed (no, not by sam/theaccountant before any of the exchange students pipe up).

  2. paul67



    how would new hun fc propose to operate with no income stream until the ST money next summer



    i can`t imagine they`d get a line of credit anywhere …would the new company have to put money upfront for this?

  3. HelpMordorPolis on

    It would be helpful if we could be be pointed toward precedents as opposed to supposition. When Dundee entered admin the SFL saddled them with -25 points. Motherwell never actually recieved any punishment for going into administration. Where in the statute does it say member clubs simply gather round a table to discuss how best to help Rangers?


    If the bad mob can’t pay HM, as a club does that give us a say on how they should reform? Maybe I can’t see the woods for the trees.

  4. brucecassavetes on

    James Forrest is Lennon says:


    27 October, 2011 at 15:02



    Excellent post. That is it in a nutshell.



    The SPL heading for extinction (perhaps), one of its major clubs on the precipice (hopefully), total hostility against one manager (shameful).



    Solution? Let’s all be pals – you scratch my back, etc.




  5. spikeysauldman on

    3) Occupy Wall Street is a farce enacted by deluded young hipsters who have suddenly found out that their arts degrees from second-rate State universities don’t qualify them to waltz straight into a $70,000 a year job. It is a parade of inadequacy and confusion. They can’t even get the one point you quote right, i.e.:



    typical bullshit from a deluded capitalist with an over-inflated ego fortunate to be living in a dumbed down society in which those who deal in finance are rewarded, and valued, far greater (usually by themselves) than the likes of doctors, scientists, lawyers, engineers, teachers and even some of the mathematics specialists who work in finance and business.

  6. Currently all of the bottom 6 teams are in the relegation zone ( 3 point spread)


    Without the FoD the Mothers are in their best position for CL ( Europa spot)


    St Johnstone and Hearts are in position to move into the Europa spot.



    So why would all these teams vote for something that would possibly see them either relegated or miss out on Euro football?



    That means the only guaranteed vote the FoD could rely on is from 6th place St Mirren!



    Also ,……could everyone please stop suggesting away boycotts.


    Our team are so fragile that I reckon without our excellent away support we would lose most away games



    The Onlooker

  7. The Battered Bunnet on

    I’ve mentioned it before, but the Celtic support will go a long way to validating the football status of any Newco Rangers by our attendance or otherwise at games between our club and Newco.

  8. 67 European Cup Winners on

    weeminger says:


    27 October, 2011 at 15:05



    Thanks and I am sure the devil is in the detail BUT I cant help feeling that a solution will be rolled out that get’s the Huns out of jail


    This is why I believe we should be planning to get stronger – much stronger – as team in January



    The scum will not go away – we have to make them go away




  9. Ellboy - I am Neil Lennon, YNWA. on

    If Paul 67’s scenario becomes a real possibility then I would hope enough Celtic fans would put pressure on our club to walk away from the league. If the other clubs are worried about their own financial implications without Rangers then lets see how they react with no Celtic?



    What would be better for them an unknown tainted Rangers Newco or a sound Celtic?



    Surely we wont continue to turn a blind eye to the decades of blatant cheating and dishonesty from across the city?



    If Celtic go along with this then they should be aware that they are playing with fire in regards to us the fans.

  10. On the subject of R@ngers Financing/Newcos etc – I saw the Craig Whyte docu on BBC t’uther day.



    A wee thought occurred to me – CW is using an off-shore firm to finance the Company that owns RFC, now there seems to be no track record or audit trail to suggest that CW would have this level of funding – although there is a lot of conjecture nobody seems to know where the cash to pay off LBG came from.



    Isn’t it Ironic then that the only surviving member of the RFC Board, the chap that CW beat to purchasing R@ngers in May, has loads of cash in off-shore companies but since he lost his Tax Case earlier this year he couldn’t use this money to buyout R@ngers.



    File Under: R@ngers, Tax, Off-shore Accounts

  11. The onlooker



    If our board vote to save them, they’d have their own problems with an empty Celtic Park!

  12. Imatim and so is Neil Lennon on

    Gregg says:


    27 October, 2011 at 15:16


    Dave King is very unlikely to be a player behind the scenes. The South African taxman got £250m from him if recent comments and links on RTC is to be believed (no, not by sam/theaccountant before any of the exchange students pipe up).






    2010 Never Again



    It’s all speculation who is behind Whyte……but I’d bet Murray and Lloyds are in cahoots with whatever is going on.

  13. TheGreenManalishi(WithTheTwoProngedCrown) says:



    27 October, 2011 at 15:09



    “Dave King owns less than 10%, given that he is under house arrest and has had his passport taken from him due to a massive Tax fraud, struggling to see what he can do ?”



    He can give them expert advice on how to commit massive tax fraud….oh, wait a minute

  14. Whatever happens I doubt they will consider fans and I’m sure the rules will be bent and twisted to Rangers cause but if they do have to register as a new club I will take great delight in reminding them that those 53 and a half titles, one European consolation cup and all their Scottish and league cups will be wiped to scratch. They will never catch up with Celtic’s haul and we will soon over take the old rangers record of titles. Goodbye to them…

  15. philsilversreturns



    You are being more than a little bit disingenuous there, and it has to be said not for the first time. While it is true Corporation Law in the USA draws from earlier British influences, more English in fact re Chancery Law, the treatment of Corporations there is a whole lot different from their equivalent in the UK. Could be something to do with the fact that they invented them. Still as you have set yourself up as an expert on all things American, which Universities did you attend there, and which Corporations did you work for?

  16. CQNers,



    So finally the smoke clears.



    If this comes about then surely it will prompt an AFC Wimbledon/FC United of Manchester-type response amongst Celtic fans?



    OR someone takes matters out of DD hands and makes strident efforts to get the feck out of Scotland – home of the (sports) institutionally corrupt.

  17. If any club anywhere within UEFA goes into admin through their finacial mis management or doping a 5 yr ban from all UEFA competitions should be imposed on that club failure of the association applying this ban should have that assoc expelled for a similar period from UEFA/FIFA competitions.

  18. 67 European Cup Winners on

    James Forrest is Lennon says:


    27 October, 2011 at 15:02



    Very well written particularly the part about they can pay the debt


    Remember they got the benefits of spending money (the taxmans money) on players and wages and we and the rest of Scottish football suffered


    Its pay back time




    We must not lose our focus and sit on our hands waiting for them to implode




  19. I realise that this is off today’s topic but I wonder if we have anything to gain from third-party ownership of players;



    As well as alienating supporters of both Manchester clubs, Carlos Tevez’s name is synonymous with another Premier League controversy – third-party ownership.



    West Ham were fined £5.5m in 2007 for allowing a third-party company to own rights in Tevez and Javier Mascherano.



    That season, Tevez scored at Old Trafford to help keep the Hammers in the Premier League, leading to a long legal battle with Sheffield United over compensation for the Blades’ relegation.



    Third-party ownership is a practice banned in England but prevalent in South America and parts of Europe.



    Essentially, companies buy a percentage of a player in the hope that, if he becomes a star in the future, that percentage can be sold for a large profit.



    Clubs selling a player they only part-own receive less of the transfer fee – but, on the upside, if they are partnering with a company to sign a player, they would pay a lower fee initially.



    That could benefit a club such as Everton, who are struggling to find funds to sign players.



    With limited resources of their own, a third party would pay the bulk of a transfer fee, allowing the player to turn out for the club over the course of his contract.



    The company would then profit if the player was subsequently sold on for a higher amount.



    Those in favour argue that the system provides clubs with new sources of finance, while critics say it takes millions of pounds away from the game and raises issues of transparency and integrity for football’s regulators.



    Premier League and Football League rules require clubs to buy out any third parties which claim to own the economic rights in a player before their transfers are permitted in the top flight.



    The ban was introduced at the start of the 2008-09 season following the Tevez affair.



    Last season QPR were fined nearly £1m for breaching regulations regarding the 2009 signing of Alejandro Faurlin.



    Ex-Arsenal chief executive David Dein condemned third-party ownership as “enslaving players” while, in Brazil, footballers owned in this way have been dubbed “pizza players” because their rights are sliced​​ up.



    But it is on the increase. One recent entry to the third-party market is Hollywood talent firm Creative Artists Agency Inc (CAA), who manage film stars such as Tom Cruise and George Clooney.



    It now runs an investment fund – Quality Football Ireland Ltd (QFI) – that co-owns players with clubs. Jorge Mendes, the agent of Real Madrid’s Jose Mourinho and Cristiano Ronaldo, is a consultant to QFI.



    With the European economy imploding, third-party ownership potentially creates a new revenue stream for clubs. Portuguese blogger Ben Shave said: “It has become the primary source for an instant cash injection in Portugal.”



    In September, Sporting Lisbon, who finished 36 points behind champions Porto last season, released their accounts to reveal QFI owned 50% of seven of its players. Turkish side Besiktas, Portugal’s Braga and Spain’s Real Zaragoza are other clubs working with QFI.



    It is not hard to understand why Sporting have opted for this method of cash infusion.



    While they posted a 43m euro (£37.5m) loss last season, Porto have made over 130m euros (£113m) on transfers since 2008, while Benfica have pocketed over 100m euros (£87m) in just over a year.



    Professor John Beech of Coventry University said: “I’m against credit being too easily available to a sector which has a uniquely bad record for business failures.



    “If a club is cash-strapped, its problems won’t be solved if it doesn’t sort out its business model.”



    But Tevez’s adviser, Kia Joorabchian, argues that third-party ownership could potentially increase competition in the Premier League.



    Earlier this month, he said: “Everton have just said they don’t have money to invest in players.



    “If the banks are unwilling to lend them money, there needs to be another vehicle that is allowed to lend them money to enable them to compete and challenge. If not, it will always be the top four competing for the title.”



    Unlike the Premier League, the rules laid down by world football’s governing body Fifa do not prohibit investment funds like QFI. However, Fifa does ban third parties having “the right to influence the club’s choices in employment and transfer-related matters.”



    But just how do you police “influence”?



    The anonymity of investors in third-party agencies also raises the possibility of a conflict of interest – and this has led to calls for a Uefa or Fifa register of club and player ownership interests.



    Lawyer Daniel Geey of Field Fisher Waterhouse said: “If club owner A has an economic interest in player B and club A plays against a team fielding player B, there is a potential risk that the authenticity of competition could be downgraded by an owner’s influence on a player.



    “Even if this was unlikely to occur, the need to protect the integrity of outcome – and uphold the highest principles of fair play – may be considered crucial at a time of alleged football match-fixing in various countries.”



    CAA, Uefa, Sporting and Besiktas all declined to discuss the issues raised by third-party ownership when approached by the BBC.



    But what about a level playing field in European competitions?



    Sporting, Braga and Besiktas are playing in the Europa League, with both Braga and the Turkish side in groups containing English teams – Birmingham and Stoke respectively. If they can use third-party owned players, surely that provides them with a competitive advantage over their English rivals?



    And, in the light of Uefa’s impending Financial Fair Play regulations, how will players who are co-owned by third parties be treated on clubs’ balance sheets?



    Financial blogger Swiss Ramble said: “Financial Fair Play is focused primarily on profit and loss. Debt is only an issue insofar as a club can service it [pay the interest].



    “If a club pays less as a result of third-party ownership, its need for debt would be lower, so interest would be lower, meaning there would be a benefit.”



    Third-party ownership would also make it easier for clubs to balance their books because they would pay a lower transfer fee. In terms of accounting, that fee is spread across the term of a player’s contract length, also known as amortisation.



    With a player on a five-year contract, that would mean five years with lower transfer fees included in their accounts, freeing up revenue.



    Three years ago the world’s economy got into serious trouble partly as a result of the use of complex financial instruments that few people understood.



    Will the same be true of football in its search for funds to fuel dreams of glory?




  20. If there is to be a Rangers Newco then they should not be allowed to join the SPL, and the SPL should not enertain them.



    Let them start from scratch in a much lower league.



    As regards money, the SFA and SPL would just have to up their game and work harder to get sponsorship etc.

  21. I fear if our Absentee landlord holds up his voting card in favour of the Huns resurrection it will be the start of a very ugly civil war in paradise.



    We do not need the Huns with their fascism, racism and sectarianism



    This institution deserves to die and no Donald Trump wanna be with scaffolding for hair should be allowed to cheat his way back into the spl.



    If the spl is to die let it.



    People say where would we go.



    We will find somewhere but anywhere would be better than a set up that allows cheats, crooks and bigots to prosper



    Celtic will be more than welcome in the league of Ireland



    Hail Hail

  22. ‘Not one thin dime’ to coin a phrase will Celtic ever see from me or my family if they vote for this to happen.

  23. HelpMordorPolis on

    The fall out from this tax case will not see Celtic getting ‘squared up’ for all the wrongdoings committed by Rangers. The SFA have already condoned everything they have done by not reigning in their foul play, be it social or financial. The best we can hope for is any quality they have gets punted to satisfy creditors and we get to destroy them on a football pitch.

  24. Paul67 – an interesting article, and one certainly worthy of debate.



    You believe that the Huns demise would cost Celtic tens of millions of pounds, can I ask over what period that relates to, and on what basis you believe this to be the case ?



    As I see it, their existence in the last 3 years has cost us tens of millions of pounds, in terms of lost revenue from Champions League football, I cannot then see what difference their demise or existence should make to us.



    Our domestic TV deal generates us how much p.a. ? Does anyone know an exact figure ?



    Our overall revenue from Media for the year to June 2011 was £7.2m, down £3.5m on the year before, which is attributed to 3 fewer European games. With the likely guarantee of at least a Champions League play off against the likes of Malmo or Maribor then is it not conceivable to think that we could at least get back to the 2010 figure of £10.7m , nevermind the £18m we hit when we got to the CL last 16.



    Would we sell less jerseys/merchandise if the Huns ceased to exist ? I don’t think so. If we were winning the league we would sell more.



    Would we sell more or less seats in the stadium ? A more successful Celtic would potentially lead to better attendances, even without the derby matches, which some of us would not subject our children to. Attendances may well have bottomed out at the current level in any event due to the poor state of the league, and our team.



    Do Celtic need the Huns ? Porto, Lyon and Copenhagen have all dominated their own domestic leagues over the last 10 years, with only occasional competition, yet all three of those leagues are ranked better than the SPL and all of those teams have performed better than Celtic in the last few years.

  25. Can any one tell who the swedish football agent Lennart Norgren represents. He is hot footing it to Celtic Park, as we speak. Told me to expect some good news.

  26. Paul – -Brilliant piece, well done.



    There is no question to answer really, they should not get away with it, period. It is wrong in every way, legally, morally but I’d put my life on theline to say they will get away with it. The odds are so stacked in their favour, wrong I know but watch this space.


    Whatever happens, we do not need them in any way, so let’s not ever think we do. They have cheated their way through all the help the get from the media, politicians etc. We have a chance to finally get rid of the disease that afflicts Scottish football, and has done for decades, so let’s take it. Never give a mug an even break.



    Hail Hail




  27. TheGreenManalishi(WithTheTwoProngedCrown) on

    cadizzy says:


    27 October, 2011 at 15:28



    Hear, hear. This club is a litany of shysters fraudsters and crooks.



    1. MBB struck off as director 7 years


    2. MBB close associate jailed fraudster


    3. Baxendale Walker (sold the EBT) Baxendale struck off


    4. Gary Withey (Co Sec) Colyer Bristow, Colyer Bristow being sued for an alleged tax scam


    5. Dave King – convicted fraudster



    Does the SFA have any concept of “Fit and Proper”

  28. HMRC will oppose the prepack legally. That is a given. It is too complicated to say if that would be successful. They can also move to appropriate the existing debt to the new pheonix company, once again via courts and once again very complicated. Wouldn’t it be a chuckle if all of the machinations outlined above by Paul took place, they got the place back in the SPL only for HMRC to successfully argue it is the same company and the court to re-apportion the existing debt?



    Most who read this will know this has been the likely outcome for Whyte for day 1. Particularly when you see Mr Ellis sitting there, silently, with a 25% stake. Nobody mentions the property developer and his 25%…..



    The tale I was told, which I will regale again here, by my usual highly drunken babbling man……



    Whyte was always going to prepack. Rangers own a large chunk of land down by the riverside at Govan that is smack in an area getting redeveloped into high value housing. The plan was always, pay £1 to take on the debts. Use the season book money to pay the bank then limp along for as long as is possible allowing Wavetower to rack up as much “investment” and “management fees” as is possible (Whyte normally charges enormous fees for his other companies that he “helps”). The longer they limp the larger the security held by Whyte as the meter is ticking day by day. You will note this is outlined in the shareholder circular where he tells them that all investment is added to the group debt that will only be wiped out should insolvency not occur. The increasing contracts etc in the summer and the purchase of token players is all to Whytes benefit for increasing group debt and asset value. Once the plug is pulled as the floating charge holder Whyte can move for prepack where he purchases the assets for an independently assessed fee. This fee is always, always less than market value. It is how these things work. So then Whyte gets all of the companies assets, sans debt, for under market value. He then sells the football business to somebody else for a very large profit but keeps the land in the group. If he manages to persuade the other clubs to allow them back into the SPL he has hit the jackpot as that will have monumentally increased the value of the football business.



    According to my drunken man, he will pay a pound and trouser somewhere in the region of £40m personally once all the deals are done. And all he will pay is £1, he has not been required to put one single penny in.



    He will never be able to return to Glasgow though as Rangers will be no more. The team playing at Ibrox, in blue, will have no history but there will be a team playing at Ibrox in blue, he will keep that promise.



    Of course none of the above is fact, just drunken meanderings ;)



    This monumental, criminal screwing of the crown must not be allowed to come to pass

  29. It would be almost biblical. The Celtic Board vote to allow newhunco into the league. The fans abandon Celtic for the newly formed fan based FC Celtic of Glasgow and both of the ‘Old Firm’ die.



    “Because it’s in my nature” said the scorpion to the dying frog.

  30. LivornoBhoy-stands by Neil Lennon on

    Pearsedad says


    27th October, 2011 at15:38



    Does Lennart Norgen represent Alex Milosevic perhaps? Rumours that Celtic are about to sign a pre-contract for him.

  31. Rogueleader



    From memory the Whyte agreement sets a time period in which insolvency has to occur for the £18m not to be his. What was the limit?

  32. on a pleasant note I see that the Thai tims could be coming to Celtic Park soon..(via FB page)

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