Naming the Rose


Livia Burlando says: Thursday, October 18, 2012 at 11:08 0 0 …

Comment on Naming the Rose by HirsutePursuit.

Livia Burlando says:
Thursday, October 18, 2012 at 11:08
0 0 Rate This
taxlawplebeian says:
Thursday, October 18, 2012 at 10:39
Charles Green isn’t stupid (presumption), why would he open himself up by stating things like “the properties are valued at £80m”, unless his backside was covered
I agree he isn’t stupid, but he does tell outrageous lies; almost every public statement contains at least one. And for the most part they go unchallenged
For accounting purposes, the properties can be valued in one of two ways.

On a commercial basis – what are they worth to a potential purchaser.
On a rebuild basis – how much would it cost to build the same structures.

SDM changed from commercial to rebuild valuation to allow RFC to borrow up to £80m from BoS. It did not then, nor does it now, bear any relation to what anyone would pay to own those properties.

Together, Murray Park & Ibrox have a rateable value of approx £2.5m. The rateable value is an truly independent valuation & is set according to the estimated annual rent that a property should be able to command in the context of the business undertaken.

So, on the basis that football will continue to be played by a team using the Rangers name for the foreseeable future, a commercial property investment valuation is likely (I would think) to be somewhere between £20m and £30m.

My suspicion is that D&P gave their valuers a brief – asking what the properties would be worth if Rangers FC were unable to continue playing football. The scrap value, if you like, is what was valued at £1.5m.

CG’s reference to his recent rebuild valuation is an obvious deflection from the true commercial value and the accusation of gratuitous alienation. He will still cling (when it matters) to the ridiculously low commercial valuation obtained by D&P for the purpose of the sale of assets.

HirsutePursuit Also Commented

Naming the Rose
killiemad says:
Wednesday, October 17, 2012 at 16:18
6 0 Rate This
Mr Clark said this would not affect the new Rangers “as it is a completely separate entity”.

He added: “As administrators, our primary statutory function was to ensure Rangers continued as a business and this was achieved.

Now this is very, very, strange thing to say.

The primary statutory function was to attempt to rescue the company as a going concern. The administrators have no legitimate interest in ensuring Rangers {the brand} continued as a business – unless it was in the interest of creditors to do so.

If Paul Clark truly said these words, he has, I think, just disqualified himself from future employment as a a licensed UK Insolvency Practitioner.

Naming the Rose
Agrajag says:
Sunday, October 14, 2012 at 17:17
0 0 Rate This
HirsutePursuit says:
Sunday, October 14, 2012 at 16:55


Thanks for the effort, very much appreciated.

Surely the floating charge will crystalise when liquidation starts, and in effect become a fixed charge over those assets not already covered by an existing fixed charge. Up to the value of the debt owed to the floating charge holder. Is that not how it works.

Surely a floating charge over the all assets of Rangers PLC (minus some specifically precluded and identified ones) is now effectively worthless, as Rangers PLC has disposed of those assets. What it now has in theory is some cash, but that will be eaten up by the administrator and the fixed charge holders.
It’s the small amount of cash that is left for unsecured creditors that is key. As long as there is some benefit (no matter how small) to the unsecured creditors, disallowing the Ticketus claim and the floating charge, makes a difference to the creditors as a whole.

Remember, D&P claim to have achieved the second purpose of administration – but when you look at the headline figures, this does not make any sense. If my theory is correct, they can back up their claim with facts.

And also, if Ticketus have not actually made a claim to date (using the floating charge) then can they do it now. Is the period for notifying the administrator of a debt not over. So anything not currently allowed for is effectively lost.
I think they have contracted with D&P – as part of the sale of business & assets – not to claim breach of contract and make a claim under the floating charge. If this is true, and BDO undo that contract, they would be free to make a claim

I hear what you say, and appreciate you explaining it to me, but I think the floating charge is a red herring. If it was going to have any effect on the administration / liquidation it would surely have happened by now. The claim would have to be made.
As I say, I think the idea is that no claim will be made. That’s the point – it’s simply insurance against the danger of BDO rolling everything back.

Again I am not saying that the people behind Sevco are not also the people behind Ticketus, and I respect your opinion. I just still see it as speculation. Don’t get me wrong, I would find it hysterical if you were right, as the Charles Green share issue would really be shafting the Rangers fans. Taking their money from them, giving it to Ticketus, and getting Craig Whyte off the hook.
I’m slightly conflicted. I went from thinking that BDO would have to undo the sale – and imagining what carnage that would cause – to now believing that the sale will be ratified by BDO.

Neither scenario is likely to be particularly good news for the supporters of the new club

Naming the Rose
Agrajag says:
Sunday, October 14, 2012 at 14:23
2 0 Rate This

Just one other thing, if you don’t mind. Something I have never grasped.

If Ticketus are not owed anything then what use is a floating charge to them. It would be a security over no debt.
D&P sought creditor claims for a CVA – which, of course, ultimately failed.

I have seen no evidence (in fact, quite the opposite) that Ticketus made a claim – as an unsecured creditor – for the purposes of that CVA.

In theory (if not in practical terms) Ticketus still have a valid contract with RFC(IA) that should see them paid according to the agreed schedule. Of course, they won’t be paid – but, as it stands, they appear to have no CURRENT debt with RFC(IA).

It is only if/when Ticketus accept non-performance “as a repudiation, rescind the contract, and claim damages”, that the debt becomes something that the administrators or liquidators can deal with. Without a valid claim for damages, they cannot disadvantage the other creditors by allowing debt that is merely assumed. As I say, to my knowledge, Ticketus have not yet pressed that button.

So the very big question is why??

We know that CW kept the floating charge alive when the HB0S debt was repaid and assigned it to Wavetower. This is a known fact.

CW/ Wavetower have no valid debt associated with that floating charge. This has been asserted, on a number of occasion by D&P and is not really disputed.

We are told (by both CW & Ticketus) that CW gave commercial & personal guarantees to Ticketus. We have no real reason to think this is not true.

We are told that Ticketus have started legal proceedings against CW and Liberty. We can, I think, agree this is a reasonable action in the circumstances.

We know that a floating charge was placed over the assets of Ranger Group (Wavetower) to the benefit of Liberty. This was registered some time ago and, again is not at issue.

We know then, with a fairly high degree of certainty, that Liberty are the ultimate beneficiaries of the RFC(IA) floating charge (but have no associated debt) and that Ticketus have a potential claim against both Liberty and RFC(IA).

From all of the aforementioned, and without too much speculation, we can deduce that Ticketus (with the acquiescence of CW) could convert their potential (as it stands at the moment) RFC(IA) debt of circa £27m to a debt secured by a perfectly valid and enforceable floating charge.

Perhaps CW is playing hard-ball and Ticketus do not yet have control of the floating charge. Maybe he is looking for some pay-off before signing control over… perhaps.

But, on the other hand, even with an enforceable floating charge, Ticketus will only see £1m – 2m of their £27m on the basis of the sale of assets at £5.5m.

And lets look at that £5.5m sale.

The current rateable value of Murray Park is £600k – for Ibrox it is £1.9m.

What is rateable value?

The Scottish Assessors give all non-domestic property in Scotland a rateable value, which is a legally-defined valuation of a property, broadly based on an analysis of annual rental values.

So, we have two properties – with legally-defined valuations that say they should command around £2.5m in annual rent. Say that £2.5m is too high. Say, to be conservative, it should be £2m. Say, you’re looking for a generous 20% gross return on your investment. If the annual rent is £2m, the property value is around £10m. In reality, £15m – £20m should be achievable in an open sale. So why were the properties sold for £1.5m?

Charles sold £10m of STs and is looking to raise another £20m on the strength of the Rangers FC brand. It appears to me that the Rangers FC brand – and the other trademarks – have a value running into high seven figures.Why was the brand sold for £1 along with all the other aspects of “goodwill”?

Why did they continue trading and the administration allowed to run a £4m loss?

The only answer, that makes any sense to me, is that the administrators can “write-off” a larger amount of debt than they cost the creditors by trading at a loss and selling under-value. While everyone was fixating on the possibility of HMRC going against policy and agreeing a CVA, the real deal, I think, was done with Ticketus.

It seems common sense, that the Ticketus investors were in a strong position to negotiate a deal with D&P that would see them get the assets cheaply by allowing the unsecured creditors to pick up some scraps.

If I am correct, Ticketus will never make a claim against RFC(IA) if the sale to Sevco stands. If BDO threaten to undo the sale, Ticketus will threaten to make a floating charge claim against RFC(IA). If that claim stands up (and I see no reason it would not) Ticketus get everything up to £27m and the unsecured creditors get nothing. As this would be a worse result for creditors as a whole, BDO would not, in those circumstances, undo the sale.

IMO, if D&P don’t have some “get-out”, they are on an extremely sticky wicket – both professionally and legally. I can see no other explanation for any of the apparently baffling events and decisions, than that the “confidential” part of the Sevco sale was that Ticketus would not claim on the CVA.

Recent Comments by HirsutePursuit

Who Is Conning Whom?
I am with you in most of what you say, but there are some important differences.

SFA Article 6.1 & 6.2 say:

Clubs or associations undertaking to promote Association Football according to the Laws of the Game and these Articles and other rules of the Scottish FA may be admitted as registered members, associate members or full members, subject to the provisions of Articles 6.2 to 6.7 (both inclusive).
6.2 A club or association shall be admitted as a registered member automatically by reason of its being admitted as a member of an Affiliated Association or an Affiliated National Association, or in the case of a club through membership of or participation in an association, league or other combination of clubs formed in terms of Article 18 and in the case of an association by being formed in terms of Article 18, provided it is not already an associate or full member. A registered member shall not be a member of more than one Affiliated Association or more than one Affiliated National Association. A registered member may apply at any time to become an associate member.

We are in complete agreement, I think, that SFA Article 6.2 made Sevco a registered member of the SFA from the date it was accepted by the SFL – 14th July 2012.

But, and I think this is important, the nearest the SFA get to insisting that a club has associate or full SFA membership is Article 6.2 which simply says, ‘A registered member may apply at any time to become an associate member.’
Note: no timescale applies… and no consequences (from an SFA perspective) if a club chooses to not make that application.

So I think we are on common ground that Article 6.2 was applicable as far as the registered membership was concerned – and Sevco did not take the opportunity to apply for associate membership by this method.

If we then go back to what the SFL Rules actually said:

6. REGISTRATION WITH SFA A CONDITION OF MEMBERSHIPA Member or Associate Member who is not already a full or associate member of the Scottish Football Association must make application to become a full or associate member of the Scottish Football Association (as the case may be) within fourteen (14) days of being admitted to membership of the League failing which its membership of the League will lapse, and in the event that the application is unsuccessful, its membership will lapse upon that decision being intimated to the League.

Now, if the SFL was being prescriptive about which SFA Article was to be used (to apply for full or associate membership), and that Article 6 was the only valid route, why mention full membership as an option. If ‘application’ is meant to mean only applications in terms of SFA Article 6, the only relevant option would be to apply as an associate SFA member.

No, the SFL rules are not prescriptive in the manner of that application. I think Rule 16 is clearly written to allow a transfer of associate or full membership from an existing club to a new club or entity under SFA Article 14. 

In fact the only method by which this could be achieved is SFA Article 14

14. Prohibition on Transfer of Membership14.1 It is not permissible for a member to transfer directly or indirectly its membership of the Scottish FA to another member or to any other entity, and any such transfer or attempt to effect such a transfer is prohibited, save as otherwise provided in this Article 14. Any member desirous of transferring its membership to another entity within its own administrative group for the purpose of internal solvent reconstruction must apply to the Board for permission to effect such transfer, such consent not to be unreasonably withheld or delayed. Any other application for transfer of membership will be reviewed by the Board, which will have complete discretion to reject or to grant such application on such terms and conditions as the Board may think fit.

…which allows the board to grant an application for transfer of an existing membership on such terms as it sees fit.

Importantly, the discretion only applies to which terms and conditions to a transfer of a membership that already exists.

Having complete  discretion on how or if that transfer (of full membership) took place is completely within the board’s power via Article 14.

What it doesn’t do is empower the board to create a new type of membership. 

And, even if it does claim to have done so, I still don’t understand how the SFA ‘conditional’ membership would satisfy the SFL requirement for an application for associate or full membership?

Remember, this transfer application was an SFL requirement. The SFA had no interest in whether or not Sevco applied for associate or full membership.

It seems to me that the SFA and SFL approached the Sevco scenario in a similar way as they did when Inverness Caledonian were admitted (as a new club) in 1994.

Difference is ICT, the SFL, SPL and SFA all recognise that that club was founded in 1994.

As I said earlier with regard to the birth of Sevco, the deceit is not so much in what they all did, but in what they said and continue to say.

Who Is Conning Whom?
The new club (Sevco) was issued with written permission to use the name of a club in full membership (Rangers).

This was necessary because both existed as SFA member clubs at the time.

Who Is Conning Whom?
This was the nub of the ‘conditional membership’

10.7 Each club in full membership or associate membership shall in its Official Return register its ground and playing field dimensions and no such club shall remove to another ground without first obtaining the consent of the Board. Any club in full membership or associate membership wishing to make any alteration to its name, its registered ground or its playing field dimensions must first obtain the prior written consent of the Board. No club in registered membership shall adopt in whole or in part the name of a club in full membership or associate membership without the prior written consent of the Board.

Who Is Conning Whom?
The 14 day application deadline was an SFL requirement – not something that the SFA had any locus in considering.

As long as Sevco was a member of the SFL it was a member of the SFA.

It would have been up to the SFL management committee to decide if the application for transfer (rather than application for a new associate membership) met its requirements. If it did not, it would have been within its powers to revoke Sevco’s league membership. It is an arguable point, but there is no suggestion, as far as I’m aware, that the SFL league management committee ever met to even discuss the matter.

Nevertheless, I think you are saying that Sevco was no longer a member of the SFL at the time of the SFA statement – therefore needed this ‘new’ SFA membership category to play Brechin.

But how would any type of membership of the SFA help if it was no longer a member of the SFL? If its membership of the league had already lapsed or been revoked, another SFL EGM would have been required to try and vote the club back in. I’m 100% sure that did not happen.

On 29th July, Sevco must still have been a member of the SFL as the Ramsden Cup was only open to members of that league.

There was simply no mechanism for the club to rejoin the league in the available time. If it did not rejoin (and I’m as certain as I can be that it did not) then it cannot ever have been removed as a member of the SFL.

And as I keep saying, as a member of the SFL, it was also a member of the SFA.

The SFA’s deceit was not in its actions – but was in its words.

Don’t forget that the SFA had to consider the use of the Rangers name. The ‘conditional’ membership squirrel has been particularly useful in covering up the SFA board’s approval for Sevco to play Brechin under the Rangers name.

That, in reality, was the big announcement on that day. The rest was sleight of hand.

Smoke and mirrors.

Who Is Conning Whom?
The golf club analogy has been used before.

Dear old dad is a member of St Andrews (other golf clubs are available). To make best use of the facilities new members must apply to a ‘house’ that will give access to their respective lounges and bars. After 15 years of continuous membership Mon pere was awarded the status of ‘Gold Member’.

Gold Members have their own lounge and gain a range of additional benefits. 

Recently poor old dad has become poorly and suggests that l join the golf club and take over his ‘Gold Membership’.

I join the club and, with a letter of agreement from sickly pater, apply for the transfer of his ‘Gold Membership’ status.

The committee meet and decide that I can only take on the enhanced membership status if old pop dies.

I tell them that father is on his last legs and won’t last the weekend.

As an existing member I can enter the club’s Saturday medal competition. On a conditional basis, they tell me I will be eligible to use the ‘Gold Members’ facilities. They issue me with a letter to confirm this arrangement.

They will reconvene in several weeks to confirm the transfer of membership status – assuming that by then papa will be gone. If he makes a miraculous recovery I must then apply to join one of the standard houses.

About the author