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The prepack route for Rangers Newco FC

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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. Snake Plissken on

    I know this might be a knee jerk reaction but if they slime their way out of punishment i.e relegation to division 3 then I for one will be disgusted but unsurprised.

     

     

    On the other hand if Celtic’s custodians vote to allow them automatic entry to the top flight I can see the logic but it is short term logic.

     

    I want them to suffer. I want the to take 4 years to at least get the chance of competing in the top flight again and I want them to be trampled into the ground for long enough so their filthy support learn real humility if such a thing is actually possible. The Celtic board if they vote to save them will not get one penny from me ever again until each and every member of them who kept them alive is removed by hook or by crook from Celtic. There are thousands who feel the same. We love our team but we despise them and all their filth and bigotry and hate. Scotland doesn’t need it and I think on the whole Scotland doesn’t want it. Aberdeen, Dundee United and Hibs certainly hate them and I would argue that even Hearts fans hate them as well. I know a lot who certainly hate them. It would be likely that Mad Vlad would vote to keep them out as his track record suggests a hatred for both us and them. He would see an opportunity to be number 2 club in Scotland AND possibly win the title. He runs them, he will vote against. We should approach him and see what he thinks – call it a carve up, call it what you like but he ironically could be our best best. The enemy of my enemy is my friend – think about it.

     

     

    Perhaps both Edinburgh clubs are the best bet as Hibs fans have no love for them. Petrie has Hibs debt free is that not correct? They could certainly start to challenge and we know that the Dons despise them and all their works. There are allies out there to keep them down.

     

     

    People talk about loss of sponsorship and funding well I don’t think the TV deal expires for a while yet although I could be wrong but regardless they have virtually no sponsors at the moment anyway and it may mean we need to take a hit for a few years ourselves but with them out of the way we have the biggest income potential and that will be enough.

     

     

    If their new form appears they must start from zero points and their team must be sold to pay the piper. Craig Whyte has no bottomless pit of cash so he cannot do what Murray did for years.

     

     

    The Celtic board had better think VERY carefully should this come to pass.

  2. merseycelt dumps sadsally on

    All this defending of the crown does make me laugh!

     

     

    I’m not sure it’s what I had in mind in my younger, rebellious, republican days!

     

     

    Vive la revolucion!

     

     

    HH

  3. LivornoBhoy-stands by Neil Lennon on

    Just checked on google. Milosevic is represented by Nenad Lukic. So he may not be the player unlesws he has changed agents.

  4. TheGreenManalishi(WithTheTwoProngedCrown) on

    Chairbhoy says:

     

    27 October, 2011 at 15:47

     

     

    Possibly a bit of poetic licence re: house arrest, but i definitely read some time ago his passport had been surrendered due to his tax investigation, he has now been found guilty of 250m fraud and a jail sentence is still a possibility. I read an article recently (Evening Times ?) that he was on his way over to sort out the MBB

     

    and wondered how could this be ? as usual lazy journalism on behalf of the LL No way Dave King will be leaving SA at any time in the foreseeable future.

  5. Trying to sort our backs out

     

     

    rogne mulgrew

     

     

    protected by wanyama ledley , this’ll be helped when brown gets back, kayal has less to do when brown’s there imho. I don’t see a place for ki at the moment, very talented footballer but is missing something for the spl at the moment

     

     

    1st half last night, it looked like there was 30 yards between midfield and backs.Wilson must have a part to play, he has more experience than others

     

     

    til we get izzie back lb is a problem. CB’s need protection from all angles at the moment. El K ok so far.

     

     

    Mon the hoops, freakin delighted for hooper last night. what a take down ‘but he wasn’t under pressure’ said the commentator !!!

  6. I have just checked out newsnow rangers, just to see if any of their items contain anything similar to what Paul has written. I am astonished to find there is nothing about administration, insolvency, or anything like that. Are they blocking these articles in the hope that the big blue fairy will appear at night and all will be well, or, are the articles and the items about rangers news just not interested in this calamitous situation which is about to hit scottish football and sundry. Personaly, I hope they get hammered, thrown out, and made to play their games at the racecourse in Paisley for the next 20 odd years. At least we wouldnt have to pay £42 to get in to castle greyskull. Hail Hail.

  7. A league with no Huns? A Celtic team full of home grown talent, being paid an average wage? No TV crap, 6pm kick off’s, Saturday at 3, Pay at the gate?

     

     

    Sounds like heaven to me.

  8. Dharma Bam

     

     

    In all seriousness I don’t think there’s much of a comparison. Murray may have gotten in over his head, and I don’t doubt his actions were reckless or stupid, maybe even borderline. However, Whyte has been struck off and the list of companies he’s taken to the wall is too long to ignore.

  9. I think Norgen Lennart is right. If Norgen Lennart concludes contract at Celtic Park for one of his clients that will be indeed excellent news for him.

     

     

    Dharma Bam

     

    I checked your link and think that Jonas Lantto’s haircut suggests he would be good for Sheep team. Maybe Lennart got wrong address?

  10. The Battered Bunnet on

    Kev

     

     

    It’s not entirely preposterous. Certainly, many fans support Celtic because of a collective sense of shared values. If those values are so abjectly ignored, we will lose supporters.

     

     

    For Scottish Football as a whole there is a clear dilemma. Rangers make a substantial contribution to the finances of the game. Changing the rules to allow Rangers to parachute back into the SPL, while less damaging short term financially – there is a decision to take on TV anytime soon – clearly corrupts the spirit of the game, and will cause longer term problems, some of which are outlined by Paul in his article.

     

     

    It seems inevitable that for some clubs, they will be damned whichever choice they make.

  11. Snake Plissken on

    BT

     

     

    I am going to go to that game if anyone gets me a ticket. If not a meet up is on the cards.

  12. Rogueleader

     

     

    If Rangers 2 “The Prepack” take over Rangers 1 “The Crapsack”s place in the SPL INCLUDING current points total less small wrist slapping deduction, surely this will only strengthen HMRC’s case that Rangers 2 = Rangers 1 and getting the debt reapplied to the new team will be easier.

     

     

    Rangers 2 could therefore start in the league from whatever date but with 0 points and try and pretend they are a new entity.

  13. Snake

     

    should be tickets available for that..

     

     

    Hearts game 28th January cancelled due to league dup semi final…

  14. Zbyszek

     

     

    I disagree with Bontybhoy’s opinion of Sir David Murray.

     

     

    I agree with your opinion of Jonas Lantto’s haircut – a definite case of finger in electric socket

     

     

    Sorry for any confusion

  15. What has happened to the scenario outlined on the RTC blog that they had 200 grand in the bank to pay a 2mill wage bill tomorrow?

     

     

    Is that no longer the case, have they got the funds to carry on?

  16. Easy enough to vote no, if you know for a fact the other 10 are voting yes.

     

     

     

    Look, we tried our best what more can we do?

     

     

     

    No saying oor club would think that way mind.

  17. October 2011 has 5 saturdays, 5 sundays and 5 mondays, only happens once every 823 years.

     

     

    Awe Naw, is that the answer to your question :>)

     

    Enjoy your honeymoon btw.

  18. cavansam – I have been unable to find much on how a creditor challenges a prepack decision to get the debt re-apportioned to the pheonix company but I know it can be done. The snippets I have seen are they have to argue along the lines that the prepack has only occurred to avoid paying the liability and that the creditor has been disadvantaged as if the administrator had taken a different decision they would have been better off.

     

     

    Problem is the whole “prepack” thing is a legal process, involving the court, and the courts have recently been very much in favour of going with the administrators decision on these even with vehement opposition form the unsecured creditors, which in just about all cases is unpaid tax and HMRC shouting the loudest.

     

     

    As I said I have been unable to find much on this so one of our legal eagles would know more.

  19. Nuclear Bovril and a Half Munched Pie on

    Anyway the most pressing matter that should concern us all is… am I ever going to get to drink that bottle of fizz labelled ‘Mordor Implosion’ anytime soon? The willpower is a crumbling I tell yeese. It may well be guzzed this Friday come what may.

  20. BOBBY MURDOCH'S CURLED-UP WINKLEPICKERS on

    PAUL67

     

     

    That is the lead article which many people have been looking for. Congratulations on getting it JUST RIGHT,no “let’s dump Rangers cos we can”,nor “we need them,so get used to it”

     

     

    Every point you make is cogently argued,and few can possibly argue against them.

     

     

    Having said that,I haven’t read back yet!

  21. TET,

     

     

    I think your wife is magic. You can tell her if I was a fish I would be sleeping with chips right now. It was an hilarious post. I was thinking how could she do that after the swimming pool. I was not impressed. Now she is my favourite poster

     

     

    BTW yes.

     

     

    HH

  22. Thanks Rogue Leader and Paul67,

     

     

    your two pieces together make sense.

     

     

    Bitov clarity finally.

     

     

    Hail hail

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