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Rangers newco in prospect as CVA rejected

By Dan Chapman


It has been confirmed today that the CVA proposed by Rangers’ prospective new owner Charles Green has been rejected by HMRC, and that a newco will proceed to purchase the assets of Rangers in consideration for £5.5 million to be paid to Duff and Phelps.

The club’s administrators, Duff and Phelps, were informed in a meeting on Monday that the HMRC would not accept the arrangement, which would have seen their debts repaid to the tune of nine pence in the pound.  At Full Contact, we were not surprised to hear this news, based on our experience of interacting with HMRC for both football clubs and companies in general.  Some commentators will query why it is that the HMRC are taking a stance which will see them (and ultimately the tax payer) receive less money than they would have received under the CVA, but the HMRC take a wider perspective.   Their concern would be the precedent set by allowing a company (and particularly a football club) to repay such a large debt, in such a small proportion and over such a period of time.  In the long run, HMRC take the view that the warning message sent out to other companies (and football clubs) will see the tax payer better off overall. 

In one sense, this could be seen to amount to a good outcome for Rangers because the debts are essentially wiped out.  In tandem with the various other well documented problems Rangers have,  we had held the view for sometime that the newco approach would be the most suitable.  However, before the fans can relax in that knowledge, the matter of at what level this newco will re-enter Scottish football must be resolved. Rangers could be allowed back in to the SPL.  That decision used to lie with the SPL board alone.  Now, under rules agreed at a meeting less than two weeks ago, the 11 other SPL clubs will vote to decide and, if the vote is in favour of re-admission, will be able to impose case specific sanctions.

If that vote does not go in their favour, newco Rangers would have to reapply for SFA membership, and start again at the bottom of the league structure – in the Third Division. If they managed successive promotions, they would rejoin the top flight in the 2015-2016 season. Barring any qualification via cup football, the earliest they could re-enter European competition would be 2016-2017.

If newco Rangers are allowed back in to the SPL, they will have achieved an extraordinary outcome. On the face of it, the newco will be insulated from the SFA’s sanctions and the club’s existing debts, though the other clubs will decide on what sanctions the SPL themselves may impose. What those sanctions might look like remains to be seen.

It is unclear how the vote will go. SPL clubs fear the prospect of potential lost revenue resulting from Rangers’ absence from the league (and the loss of Old Firm fixtures) but many fans not affiliated to the Ibrox club would be furious about them being allowed back immediately. 

The ‘old’ Rangers are facing potential suspension or expulsion as a result of their financial offences (with the ‘dual contracts’ case yet to even be heard).   It may well be that if newco Rangers find themselves in a position (perhaps more by misfortune than design) where they face no sanctions at all (or sanctions imposed which might be considered weak),  FIFA will be asking some very firm questions of the SFA and SPL as to their ability to govern their members.  When SPL clubs are placing their vote on both re-admission and potential sanctions,  it would be prudent to have already taken their own professional advice as to what the wider implications might be for themselves and the Scottish game at large.

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About Dan
The spearhead and Senior Partner of Full Contact, Dan is an experienced solicitor and advocate, with a specialist background in employment law and sports.

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