Rangers' Administrators Publish CVA Proposal
Tue 29th May 2012 | Football Club Administration
Duff and Phelps, Administrators of Rangers Football Club, have published their proposal for a Company Voluntary Arrangement today.
A formal notice of the CVA meetings is being sent to all creditors and shareholders of the Club providing further details of the CVA process.
Paul Clark, Joint Administrator, said: “This proposal offers the best return for all stakeholders given the position the Club is in. If approved by the creditors, the CVA proposal will rescue the Club and finally enable the Company to exit Administration.
“Since our appointment, it has been our principal objective to propose a CVA, which is the preferred solution to what has been a catastrophic period for the Club. That view is shared by everyone with Rangers' interests, and those of Scottish football, at heart. For some time, the prospect of presenting a CVA proposal with a realistic chance of success appeared remote however, we are delighted now to put forward a solution which we think will take things forward as originally envisaged.
“We should remember there are many stakeholders who have suffered financial losses as a result of Rangers being placed into Administration. Regrettably, there is no solution available that allows these parties to recover their losses in full. However, after a very intensive bidding process for the Club we can now say that the offer being put forward as part of the CVA is the best solution available to creditors and we hope they will approve the proposal.
“Having issued the proposal, it is now a matter for the creditors to consider what is on offer and it is their decision entirely as to whether the terms of the CVA are acceptable.”
Charles Green, who is leading a consortium to purchase Rangers, said: “Today is an extremely important milestone for Rangers to begin the journey back to where the Club belongs - as a leading sporting institution that can hold its head high both on the field and off it.
“I have great sympathy with creditors, particularly small local businesses in the community around Ibrox, who have suffered in the lead up to Administration. However, I fervently hope that creditors will form the view that the best interests of everyone will be served by Rangers continuing as the successful Club it is and recovering as a business in the forthcoming seasons.
“The consortium I am leading can only do so much to heal the wounds of the past, but we can do something about the future and that is where our main focus must lie. I hope creditors will approve this proposal and we can begin the task of rebuilding Rangers in earnest.”
The CVA proposal will be published on www.rangers.co.uk with notification of the statutory meetings of creditors and shareholders being sent to approximately 400 trade creditors, over 6,000 fans holding debentures and all shareholders within the Club.
The overall amount of money being made available for the CVA pot from the Green consortium is £8.5million. The Administrators intend to make a distribution to creditors as soon as they can, should the CVA proposal be approved.
The overall costs of the administration process will be deducted from the funds available. All costs and charges incurred in the administration and the CVA are proper expenses at levels which are in keeping with best practice guidelines set by insolvency practitioners’ regulatory bodies. All of the Administrators’ own costs are subject to approval by creditors.
The final amount available to creditors could be in excess of £25 million, depending on the outcome of litigation. The precise amount will not be known for some months.
At this stage, there are two outstanding issues that will have an affect on the quantum of funds which can be distributed to creditors.
The first matter is litigation brought by the Administrators against the former lawyers for Rangers, Collyer Bristow. Should that be successful, further funds will be made available to creditors.
The second is the outcome of the HMRC first tier tax tribunal. Should the tribunal find against Rangers that will increase the quantum of HMRC’s claim on funds available to creditors, thus diluting the settlement available for all other creditors.
The proposal will be considered at a meeting of creditors to be held at Ibrox on June 14.
The Administrators will, immediately after that creditors' meeting, convene a meeting of shareholders who will be asked to formally endorse the outcome of the creditors' meeting. The shareholder meeting is a formality under insolvency legislation and will deal only with a single resolution on whether the shareholders endorse the outcome of the creditors' meeting. Charles Green’s consortium, which should by then have an 85% shareholding in the Club, will vote in favour should the CVA proposal be approved by creditors.
Ibrox debenture holders can only attend and vote as creditors at the creditors’ meeting on June 14 if they surrender their debenture. Should they wish to do so, they will be able to apply to attend the creditors’ meeting and further details will be provided to all debenture holders.
Should the CVA proposal be approved, there then follows a 28-day period during which certain interested parties can make application to the Court for the CVA decision to be reviewed. Once that period has elapsed the Administrators will make immediate plans to conclude their involvement and the Club will exit Administration.
Duff & Phelps will continue to fulfill a role as the Supervisors of the CVA in attempting to maximise the level of return to creditors from the on-going litigation against Collyer Bristow.
Posted by: Aaron Gourley
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